[Senate Hearing 110-933]
[From the U.S. Government Publishing Office]
S. Hrg. 110-933
COMBATING GENOCIDE IN DARFUR: THE ROLE OF DIVESTMENT AND OTHER POLICY
TOOLS
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
ON
THE ROLE OF DIVESTMENT AND OTHER POLICY TOOLS TO COMBAT GENOCIDE IN
DARFUR
__________
WEDNESDAY, OCTOBER 3, 2007
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
CHRISTOPHER J. DODD, Connecticut, Chairman
TIM JOHNSON, South Dakota RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York WAYNE ALLARD, Colorado
EVAN BAYH, Indiana MICHAEL B. ENZI, Wyoming
THOMAS R. CARPER, Delaware CHUCK HAGEL, Nebraska
ROBERT MENENDEZ, New Jersey JIM BUNNING, Kentucky
DANIEL K. AKAKA, Hawaii MIKE CRAPO, Idaho
SHERROD BROWN, Ohio JOHN E. SUNUNU, New Hampshire
ROBERT P. CASEY, Pennsylvania ELIZABETH DOLE, North Carolina
JON TESTER, Montana MEL MARTINEZ, Florida
Shawn Maher, Staff Director
William D. Duhnke, Republican Staff Director and Counsel
Janice M. O'Connell, Senior Professional Staff Member
Neal J. Orringer, Professional Staff Member
Colin McGinnis, Professional Staff Member
Skip Fischer, Republican Senior Professional Staff Member
Mark Osterle, Republican Counsel
Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator
Jim Crowell, Editor
C O N T E N T S
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WEDNESDAY, OCTOBER 3, 2007
Page
Opening statement of Senator Menendez............................ 1
Opening statements, comments, or prepared statements of:
Senator Shelby............................................... 2
Senator Reed................................................. 3
Prepared statement....................................... 46
Senator Casey................................................ 4
Senator Martinez............................................. 4
Senator Bunning.............................................. 5
Senator Brown
Prepared statement....................................... 46
WITNESSES
Richard J. Durbin, U.S. Senator from the State of Illinois....... 5
Prepared statement........................................... 47
Sam Brownback, U.S. Senator from the State of Kansas............. 7
Prepared statement........................................... 49
Jendayi E. Frazer, Assistant Secretary for African Affairs,
Department of State............................................ 10
Prepared statement........................................... 51
Elizabeth L. Dibble, Principal Deputy Assistant Secretary for
International Finance and Development, Department of State..... 13
Prepared statement........................................... 58
Adam J. Szubin, Director, Office of Foreign Assets Control,
Department of the Treasury..................................... 15
Prepared statement........................................... 62
Frank Caprio, General Treasurer, State of Rhode Island........... 31
Prepared statement........................................... 71
Bennett Freeman, Senior Vice President for Social Research and
Policy, Calvert Group.......................................... 33
Prepared statement........................................... 77
John Prendergast, Co-Chair, ENOUGH Project....................... 34
Prepared statement........................................... 83
William A. Reinsch, President, National Foreign Trade Council.... 36
Prepared statement........................................... 90
Adam Sterling, Director, Sudan Divestment Task Force............. 39
Prepared statement........................................... 94
COMBATING GENOCIDE IN DARFUR: THE ROLE OF DIVESTMENT AND OTHER POLICY
TOOLS
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WEDNESDAY, OCTOBER 3, 2007
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 9:37 a.m., in room SD-538, Dirksen
Senate Office Building, Senator Robert Menendez, presiding.
OPENING STATEMENT OF SENATOR ROBERT MENENDEZ
Senator Menendez. This hearing of the Banking Committee
will come to order. Let me start off by thanking Chairman Dodd
and the Ranking Member for calling this important meeting.
Last July, Chairman Dodd asked the Senate Majority Leader
to expedite Senate consideration of H.R. 180, the Darfur
Accountability and Divestment Act, which had just passed the
House by a vote of 418-1. The Majority Leader agreed to do so,
but apparently objection was raised on the Republican side of
the aisle, so the bill remains before the Banking Committee.
It is my understanding that the Ranking Member has
expressed to the Chairman some interest in the legislation and
requested that the Committee conduct a hearing on the matter,
so we are appropriately here today.
Senator Dodd asked that I chair the full Committee hearing
this morning, and I am more than happy to do so. I believe that
the Chairman hopes to mark up the Sudan legislation later this
month and looks forward to working with Senator Shelby and
other Members of the Committee to reach agreement on a
bipartisan bill to recommend to the full Senate.
Let me formally begin this hearing entitled ``Combating
Genocide in Darfur: The Role of Divestment and Other Policy
Tools'' with some opening remarks. We have a very full agenda
and witness panels, so I will keep my opening statement brief
and ask that it be considered fully in the record.
In 1948, the United Nations adopted the Convention on the
Prevention and Punishment of Genocide. In 1948, the world said,
``Never again.'' Never again will we allow genocide to happen.
In 1994, after the genocide in Rwanda, the world said,
``Never again'' again.
In 1994, after the genocide in the Balkans, the world said,
``Never again'' again.
In 2004, during the genocide in Darfur, the United States
said, ``Never again.'' Yet those words mean nothing unless we
take real action to stop genocide.
We are here today to discuss a bill which would take real
action by taking real money out of the hands of a genocidal
regime, and I personally am here to say that I do not believe
we should delay even one more minute. If you were in the camps
in Darfur, would you be content with the counsels of patience
and delay? If you were in your home living in fear, would you
be content with the counsels of patience and delay? If you had
seen your entire family slaughtered and were hoping to escape
the same fate, would you be content with the counsels of
patience and delay? And, frankly, I believe that any more delay
continues to put more and more people's lives at risk with each
passing day.
In 2006, we were told that it is not time for new
sanctions. Early this spring, we were told that it was not time
for new sanctions. Now we are being told once again that now is
not the time for tightening the economic noose. I personally
could not disagree more. I believe now is the time.
I am confident that one tool, the Darfur Accountability and
Divestment Act, introduced by Senator Durbin and joined here by
Senator Brownback, who both have been incredibly powerful
voices on this issue, will force the Khartoum government to
negotiate and put an end to chaos and genocide in Darfur.
And, finally, I would like to point to the fact that there
is ample precedent for this tool. Many States, cities,
universities, and private pensions have taken the initiative
and have enacted or are working toward Sudan disinvestment.
Over 2 years ago, I sent a letter to all New Jersey Democratic
State legislators encouraging them to approve this divestment,
and I am proud to report that my own State of New Jersey became
the second State to enact this policy.
Since then, New Jersey has identified over $1.4 billion in
funds to divest, and of that, $300 million has already been
divested. There are currently commitments and discussions for
divesting up to another $500 million. That is just one of the
many success stories gaining momentum across the country.
So I hope that we can reach the bipartisan agreement that
would be so crucial to sending a powerful message to the
Khartoum government.
With that, I am happy to recognize the distinguished
Ranking Member of the full Committee, Senator Shelby.
STATEMENT OF SENATOR RICHARD C. SHELBY
Senator Shelby. Thank you, Mr. Chairman.
Over the past 20 years, we have taken a series of
incremental steps with regard to Sudan in an effort to deal
with the Government of Sudan's repeated violations of
international norms. These measures have included restrictions
or prohibitions on foreign aid included in annual
appropriations bills as well as congressional action on the
Sudan Peace Act of 2002, the Comprehensive Peace in Sudan Act
of 2004, and the Darfur Peace and Accountability Act of 2006.
Now, today we are considering requiring corporate
divestment from a desperately poor country ruled by a despotic
regime. This is not a step that we should take lightly, but it
is a step that we should take, and it must receive serious
consideration by this Committee today.
I commend the Chairman for scheduling this hearing and
assembling the panels that will appear before us today. I also
want to join the Chairman in welcoming our colleagues, Senators
Durbin and Brownback here, who have more than a passing
interest in this legislation and have pushed it forward. They
were pushing it hard in July. I was the one that asked for the
regular order. We are here today. Let's get this legislation
moving.
Thank you.
Senator Menendez. Thank you, Senator.
Senator Reed.
STATEMENT OF SENATOR JACK REED
Senator Reed. Thank you very much, Mr. Chairman and Senator
Shelby. This is a critical issue with respect to our response
to the genocide in Darfur, and I want to commend particularly
Senator Durbin and Senator Brownback for their leadership on
the issue, which stretches over many years. Before this was a
front-page issue, this was an issue of concern and of
conscience to both these gentlemen. Thank you.
I also want to recognize later in the panel our General
Treasurer from Rhode Island, Frank Caprio, who has taken the
leadership in Rhode Island of divesting State fund. I thank him
for his appearance here today and for his leadership in Rhode
Island.
I would like my full statement made part of the record, if
possible.
Senator Menendez. Without objection.
Senator Reed. And just let me make a point. One of the ways
that we can bring pressure to bear on corporations is through
the proxy process where shareholders can come forward, demand
in the annual meetings that these resolutions be considered,
that their companies that they hold shares in are responsible
for the investments.
The SEC at this moment is at a very critical juncture with
its proposed rule on shareholder access to proxy statements.
And some of the pending proposals and the rules suggested by
the SEC could seriously undermine the ability of investors to
ask companies to take actions on matters like Darfur. So I
would suggest--and I know that Chairman Cox is working toward
addressing some of these issues--that in a separate effort that
if we inspire the SEC to take appropriate action so that
individual shareholders can gain access to the proxies, can
make these issues part of their deliberations, I think that
will complement the legislation proposed by Senator Durbin and
Senator Brownback.
Thank you very much, Mr. Chairman.
Senator Menendez. Thank you.
Senator Casey.
STATEMENT OF SENATOR ROBERT P. CASEY
Senator Casey. Mr. Chairman, thank you for being in charge
of this hearing. I want to thank Senator Dodd for his
leadership in making sure we got this hearing scheduled.
I want to reiterate much of what has been said. I first of
all want to commend our two colleagues who are here, Senator
Durbin and Senator Brownback, for your leadership on this issue
going back years now. We are grateful for that. And I think
what brings both of you to this issue and what brings so many
people in this room together today is that so many people here
for many years have been summoned by your conscience to be here
and to work so hard on this issue. And I am grateful for the
opportunity to work with many in the Congress, but especially
Senator Durbin working on his bill, Senate bill 831.
I think it is critically important that we move forward,
not have any more delay, as Senator Menendez said, and not more
talk and more discussion. We need to move this legislation to
give the Federal Government and to give the world a directive
that we are going to use divestment as a tool, as it has been
used in many other instances, at long last to use this tool to
move an agenda forward.
I was struck by--we saw the story on Monday in a lot of
places, but there was an AP story in the Washington Post about
the ten peacekeepers who were slaughtered in Darfur. But I just
circled something that we have seen over and over again, but
just this one line from the Washington Post, and I quote--and
this is from Monday, October 1st: ``Violence and disease have
left as many as 450,000 dead and displaced 2.5 million.''
Now, we have heard these numbers over and over and over
again, and I will tell you, anyone who comes to that table
today and says, well, we have got to slow down, we have got to
be patient here, we have to have another round of discussions,
we have got to move slowly--anyone who counsels that today has
a very high burden of proof today. And I hope that those who
counsel that will bear in mind the human tragedy that this is.
So I think that many of you have worked on this long before
I got to the Senate, but I am happy to join this effort. And I
am grateful for the opportunity to be here today.
Thank you, Mr. Chairman.
Senator Menendez. Thank you, Senator.
Senator Martinez.
STATEMENT OF SENATOR MEL MARTINEZ
Senator Martinez. Thank you, Mr. Chairman. I want to add my
words of thanks to our colleagues that are here this morning on
this very important issue.
I became aware of the dire situation in Darfur while I had
the opportunity to work in the Sub-Saharan Africa Subcommittee
of Foreign Relations with Senator Feingold, and obviously this
is an issue that touches all of us deeply.
I think that the approach that is being suggested here
today is appropriate and is timely. I believe that the United
States continues and ought to continue to be a moral force in
the world, and it is not only about profits, it is also about
people. And so I do believe that it is very appropriate that in
this instance we move aggressively toward creating a financial
disincentive for people to do business with those who abuse
people in such a terrible way.
So I look forward to the testimony from the witnesses, Mr.
Chairman and thank you for holding this timely hearing.
Senator Menendez. Senator Bunning.
STATEMENT OF SENATOR JIM BUNNING
Senator Bunning. Thank you, Mr. Chairman. Thank you for
scheduling the hearing on this very important topic.
Earlier this year, there was an effort in the Senate to
move a bill dealing with investments in the Sudan. I thought
that was inappropriate because this Committee had not even had
one hearing on the subject.
I agree with everyone in this room that States and local
governments should be able to spend their money however they
see fit. That includes not spending money with certain
companies. Certainly, individuals have that same right as well.
What I do not agree with is the idea that each State or city
should have its own foreign policy.
The Framers of our Constitution wisely gave control over
foreign policy to the Federal Government, not to each State. We
must speak with one voice, not 50 or 100 voices, when dealing
with other nations. Legislation to change that balance is not
only a bad idea, but I believe it is unconstitutional.
If States or individuals think our policy toward Sudan is
not strong enough, there is a proper way to go about making a
change. Just like we have done with other countries, Congress
can pass a sanctions law prohibiting some kinds of dealings or
all dealings with the Sudan. That is the right approach, not
letting each city or State set its own foreign policy.
I look forward to hearing from our witnesses about this
topic. I especially want to hear why they believe current
sanctions law is not adequate and what, if anything, stands in
the way of States, cities, or individuals spending their funds
however they see fit.
Thank you again, Mr. Chairman.
Senator Menendez. Thank you, Senator.
With that let me turn to our two colleagues, Senator Durbin
and Senator Brownback, who have been incredibly powerful voices
on behalf of having action taken to end the genocide in Darfur.
Senator Durbin.
STATEMENT OF RICHARD J. DURBIN, U.S. SENATOR FROM THE STATE OF
ILLINOIS
Senator Durbin. Thank you very much, Mr. Chairman, and to
Members of the Committee, this is a hearing that we have been
waiting for, and I am so glad that you are doing it today. I
thank you so much for taking the time to gather this morning.
And I especially thank my colleague, Senator Brownback. We are
often faulted in Washington for being too partisan. I am happy
to report that from the beginning Senator Brownback and I have
worked together on this, as so many in Congress have worked to
deal with this.
I have my disagreements with the Bush administration. I
think that is a matter of record. But I have said before and I
will say again, this President's courage in declaring a
genocide in Darfur is exemplary. Too often in the recent past
there has been a reluctance and reticence to speak truth to
power about issues like genocide. I am happy that President
Bush spoke out when he did. I am glad that his statements about
that genocide were echoed by his Secretary of State Colin
Powell and then later Condoleezza Rice. I have spoken to him
personally about this. He has given speeches at the Holocaust
Museum just a few months ago. I believe that he is sincere in
believing we face an extraordinary, historic challenge. The
civilized countries of the world cannot ignore the reality of
the genocide in Darfur. And if we cannot ignore that reality,
we must do something about it.
I do not think we should believe that the killing and
suffering have ended in Darfur. The genocide continues. I do
not think we should believe that sending 20,000 or 25,000
peacekeeping forces from the United Nations will bring peace
and stability to this region. That force is very small in
comparison to a region as large as the State of Texas.
Senator Casey made reference earlier to a news item this
week which is troubling. The African Union force is a volunteer
force that is working hard in the area, but it is really
challenged by the size of the area and the nature of the enemy.
Just this last week, Senegalese troops were attacked and ten
were killed, and now there is a serious question as to whether
Senegal will continue to contribute forces to this peacekeeping
force. That is how tenuous this commitment is from those
currently serving in Darfur. We should never believe that this
issue has been resolved because of the action of the Security
Council.
And, third, we have to do what is necessary to put pressure
on the government in Khartoum. Time and again--time and again--
this government has come forward and said, ``We are going to
change this situation. We are going to put an end to it.'' And
they have failed utterly to do so. We have to accept our own
personal responsibility here. And the question is: What is our
responsibility?
In this era of asymmetric challenges to great powers, we
have to look to the tools that are available to put pressure
for change. What Senator Brownback and I bring to you is one
tool that could be used--a tool that will combine a lot of
different elements and putting pressure on Sudan to make a
change and, more importantly, pressure on Sudan to engage in a
peace conference that will bring ultimate peace to this region.
I do not believe the presence of peacekeeping troops will
be an easy task so long as the militias run roughshod over
these poor people. If we can force the government of Khartoum
to move toward a real peace conference and real accommodation,
then we might find real peace for these poor people who have
suffered for so long.
I will just say in brief summary here, this bill has a
number of elements that I hope you will consider:
Requiring the administration to create a list of companies
supporting the Sudanese regime. I tried to do this in the
supplemental. Unfortunately, the administration did not
respond, did not create the list that we asked for:
Requiring companies supporting the regime to report to the
SEC so that the SEC can publish the identities of these
organizations.
Requiring the administration to report on the impact thus
far of current economic sanctions.
Prohibit the Federal Government contracting with companies
who support the regime.
Authorize State and local contract prohibitions for
companies supporting the regime.
Authorize State and local governments to divest from
companies supporting the regime.
Provide investor safe harbors.
Authorize additional funding for the Office of Foreign
Assets Control within the Treasury Department.
Study how the Federal employees' Thrift Savings Plan could
create a Terror-Free Investment Fund which would bar Sudan-
supporting companies.
And finally, increase civil and criminal penalties for
sanctions violators.
All of these things would put teeth in this effort. I have
tried, as some of you have tried, to reach out to different
groups in my home State urging them to divest. Interesting
response. Two major universities, the University of Illinois
and Northwestern, said, ``We will do it. We are going to divest
from any holdings that relate to companies like PetroChina, the
largest oil company in the Sudan.'' I was very heartened by
that.
Another university, which I will not name, said they were
not going to divest, and I asked the president why, and he
said, ``It is not our policy to get involved in this kind of a
fight.'' I asked him a couple simple questions: ``Do you
believe there is a genocide in Sudan?'' He said, ``I really
don't know.'' And I said, ``As the president of a university,
you should. The President of the United States believes there
is, and I believe there is, and many people do.''
Second, ``If there is a genocide, what is your
responsibility? What is your moral responsibility?'' He said,
``I can't answer that question.''
I was really disappointed by that reply. Perhaps there are
others who want to take some refuge in ignorance or avoidance.
We cannot afford to. The President of the United States has
spoken out that this is a genocide in our time. Now it is our
time to act.
Thank you, Mr. Chairman.
Senator Menendez. Thank you.
Senator Brownback.
STATEMENT OF SAM BROWNBACK, U.S. SENATOR FROM THE STATE OF
KANSAS
Senator Brownback. Thank you very much, Mr. Chairman and
colleagues. I appreciate your interest and willingness to take
this issue up. Senator Shelby and I have spoken several times
about it, and I appreciate his interest in and support for it.
I have been to Darfur. I have been to Sudan. Once you are
there and you see the people suffering, it is just really hard
to say, well, I do not think maybe we ought to do this because
it might conflict with something else. When you see it, then it
is one of those things where you say, ``I have got to do
something.'' We have got to do whatever we can, given the
status that we have in the world. This is the most powerful
Nation in the history of mankind. And you have people who have
been run out of their villages by militias sponsored by the
government put in harm's way, dying in hundreds of thousands,
and at the same time we will probably see the Sudanese economy
grow by 13 percent this year. That is the level that is
projected for what the Sudanese economy will do this year,
growing by 13 percent. That is primarily due to investment by
Chinese and Malaysian resource companies, primarily oil
companies, some of which we are investing in.
We have said often, ``Never again,'' and we have taken up
the pledge of ``Not on our watch.'' We also need to take up the
pledge ``Not on our dime,'' and that is what we are asking for
with this campaign and this effort.
I have to say, I am particularly heartened by young people
across America who have constantly been coming to my office
saying, you know, we want to see this end, we want to do
something about it. And a group of them camped out at my home
in Topeka, led by Matthew Vines and other students from Wichita
East High School, and pressed the Kansas Legislature until they
enacted a divestiture campaign on the Sudan from the Kansas
State pension funds. And I said, ``God bless them for doing
that.'' This is a group of high school students that see it and
say this is terrible and it should not take place and we should
not be allowing it to happen and we should divest from it.
The key here for this Committee to consider--and I think
Senator Shelby has rightfully pointed out, in the regular order
of things--is that we need to act as a Congress to allow this
to take place. And that is the key point. Senator Durbin, who
has been excellent on this, has been dogged and determined on
this, and I applaud his efforts. Now some of these divestiture
bills are being struck down by State and Federal courts saying
that this steps into the purview of the Congress.
The Congress by this act can explicitly say that the States
can do this, and that is one of the key provisions of this
bill. One of the key ways the Federal Government can help is to
explicitly provide the authorization for States and local
governments to divest from Sudan. Doing so would address an
objection that has attenuated the success of targeted
divestment movements. And so in that sense, then, I would hope
it would get to other issues raised by my colleagues that we do
not want to have 50 or 100 different foreign policies. No, this
is one that is set by the U.S. Congress. It is authorized by
the U.S. Congress. Now the States can move forward with it. And
I think that is a good, regular-order way to move forward with
this. It is a way to get our citizenry involved in a key issue
of our time. And I would also hope it would do something that
Senator Reid commented about, that it would cause individuals
then to start to look at their own investments and things that
companies are doing, companies that they are investing in, and
saying, again, ``Not on my dime.'' We are going to try to do it
as a Federal Government, which we have done through sanctions.
We are going to try to do it through the States, through these
targeted divestitures that the Congress would have to allow to
take place. And we are going to press it as individuals and
with individual companies so that we are not allowing a
genocide to take place on our time, on our dime. And I think
that should be a simple, strong message.
We are seeing some early results of this in a positive
fashion. We have seen companies from the U.K. to Germany to
India that have suspended or significantly altered their
operations in the Sudan. I think there is good reason to
believe that the Government of Sudan has noticed and is nervous
somewhat about this. They are not going to say that, but the
more we can tighten this, the less they are going to be able to
grow that economy, the less money they are going to have to
conduct this second genocide.
Now, I want to remind my colleagues, this is the second
genocide by this government that was started by Osama bin
Laden. This government was started and put into power by Osama
bin Laden. They have done a genocide in the South where 2
million people were killed over a long period of time. This
government was actively involved in the Sudan Peace Agreement
that was negotiated by one of our former colleagues, Senator
Danforth. There is now peace in the South. People are starting
to rebuild, albeit slowly. Now you are seeing this take place
in the west. This is the second genocide. These guys have had
plenty of warning.
We need to act to be able to allow this to take place by
State and local units of government, and hopefully this will
also push into the private sector.
With that, I would just urge my colleagues to act to allow
this to take place.
Senator Menendez. Well, thank you both. I just have one
quick question. What would you say to the Members of the
Committee on the importance of getting a markup before the
meeting in Tripoli?
Senator Durbin. I would say, Mr. Chairman, that this could
be an excellent opportunity for real peace to come to the
region, as Senator Brownback said, when Senator Danforth led
that effort for peace in the South; and the sooner we move on
this, even if it is not fully implemented, the stronger the
message to Khartoum that we mean business and that we want to
see them resolve their own internal difficulties. I do not
believe there is anything else that we could do as a Congress
more important.
Senator Menendez. Senator Shelby.
Senator Shelby. Senator Durbin, you are the deputy
Democratic leader, the Whip. If we push this bill out of the
Committee, which we will, I believe, soon--as soon as Senator
Dodd will arrange it--you could get time on the floor, I am
sure.
Senator Durbin. I am going to do my very best. I have a
friend named Harry Reid that I will talk to personally about
this.
Senator Shelby. We should do it.
Senator Durbin. He shares our feelings about this issue.
Senator Shelby. Thank you.
Senator Menendez. Thank you both for your testimony. We
appreciate your leadership as well.
Let me call up our second panel: Jendayi Frazer, who is the
Assistant Secretary of State for African Affairs. As Assistant
Secretary of State for African Affairs, Dr. Frazer plays a key
role in shaping President Bush's foreign policy toward the
Sudan. We welcome the Secretary.
Elizabeth Dibble, who is the Principal Deputy Assistant
Secretary for International Finance and Development. Serving in
that position, Ms. Dibble oversees the State Department office
tasked with protecting U.S. investment abroad, promoting
market-based investment standards, and encouraging other
countries to adopt policies that create sound investment
regimes.
And Adam Szubin, who is the Director of the Office of
Foreign Assets Control in the Department of the Treasury. In
that position, Mr. Szubin administers America's sanctions
policy to advance our Nation's foreign policy and national
security objectives. These include programs targeting state
sponsors of terrorism, international narcotics traffickers,
states active in the proliferation of weapons of mass
destruction, and select foreign countries.
We welcome you all to the Committee. Your full statements
will be included in the record. We ask you to summarize them in
the context of about 5 minutes or so, and we will start with
Secretary Frazer.
STATEMENT OF JENDAYI E. FRAZER, ASSISTANT SECRETARY FOR AFRICAN
AFFAIRS, DEPARTMENT OF STATE
Ms. Frazer. Thank you, Mr. Chairman, Ranking Member Shelby,
Members of the Committee. Thank you for the opportunity to
testify on the administration's Sudan policy and specifically
our efforts to peacefully end the tragic humanitarian situation
in Darfur. Sudan is a top priority for the administration. We
appreciate the generous support of Congress as we work to
resolve the situation in Darfur which, among many things, has
helped us sustain the African Union peacekeepers in Darfur and
most recently achieve United Nations Security Council
Resolution 1769 authorizing the deployment of 26,000 AU/UN
peacekeepers. But, as demonstrated by the tragic events of
September 29th with the attack on a camp of the AU Mission in
Sudan--AMIS--that resulted in the death of at least 10 AU
peacekeepers, there is still a long way to go to achieve peace
in Darfur. I look forward to our continued close relationship
with Congress as we work together to bring peace to the region.
Mr. Chairman, we are at a critical point in our efforts in
Sudan. The large, robust peacekeeping force for Darfur that we
have all worked for over the last few years is finally on the
verge of deployment. Its first elements are slated to go in
before the end of this year. The renewed talks that aim to
achieve a lasting political solution in Darfur are expected to
begin on October 27th in Libya. This progress, while long in
coming, is due in large part to increased international
pressure on Sudan, led by the United States.
At the U.N. General Assembly last week, President Bush
stated that ``America has responded [to the suffering in
Darfur] with tough sanctions against those responsible for the
violence.'' The new sanctions he imposed on May 29th targeted
30 Sudanese Government-owned or -controlled companies and three
individuals, including two government officials and one rebel
leader. These new sanctions, and stepped-up enforcement of
existing sanctions on Sudan, are working. To move forward from
here, we are working closely with the United Nations and the AU
to implement the agreements, even as we continue to closely
monitor the actions of all parties.
We fully appreciate the efforts of American citizens and
the Congress to seek additional ways to increase pressure on
Khartoum. We are confident that our May 29th sanctions have and
are working to provide the necessary pressure. However, we are
at a critical moment, and it is important to avoid any actions,
including legislative measures, that might set back the
progress we have made thus far.
In considering our position, we also have to bear in mind
that the Government of Sudan has accepted UNAMID and the need
to negotiate a peace deal. At the moment, the main issue is
whether rebel factions will be an obstacle to a peaceful
negotiated settlement.
We are also concerned that some initiatives to increase
economic pressure on Sudan will damage our relationship with
our European partners rather than increase pressure in Khartoum
and may further complicate efforts to carry out our substantial
assistance programs. A welcome and useful initiative at this
juncture would be for Congress and other concerned groups to
issue statements calling for the rapid deployment of the UN/AU
hybrid force and calling on all parties to participate in the
political process.
That said, we must be prepared and the administration is
willing to impose additional sanctions if the Government of
Sudan places roadblocks to the deployment of UNAMID or starts a
new military offensive carrying out attacks against innocent
civilians.
Today, I will review the present situation in Darfur, our
efforts to achieve full implementation of the Comprehensive
Peace Agreement, which ended more than 21 years of warfare
between North and South, and what further steps are needed to
realize our goals. Efforts to end the violence in Darfur and
implement the CPA must go hand in hand, and we are willing to
exercise pressure to achieve success on both fronts. At the
same time, we must also be wary of initiatives that advance
peace in one part of the country at the expense of another.
Let me first turn to Darfur. The situation on the ground is
chaotic. Tribal conflict, survival-motivated violence,
government-backed Janjaweed attacks, clashes between rebel and
government forces, and rebel attacks on AMIS continue. Since
the beginning of 2007, nearly 248,000 people have been newly
displaced from the fighting. This is in addition to the over 2
million people currently living in camps or settlements for the
displaced and the over 235,000 refugees in neighboring Chad. On
September 29th and 30th, the 7,000-strong African Union Mission
in Sudan suffered its greatest loss since its initial
deployment in 2004. Armed men from rebel factions viciously
attacked the African Union base camp in Haskanita, killing 10
peacekeepers, looting supplies and vehicles, and destroying the
buildings. The 150 or so primarily Nigerian peacekeepers fought
back, repulsing the first wave of attackers, but in the end
were overpowered and forced to evacuate in the early morning
hours. We honor the service of those peacekeepers that lost
their lives, and our hearts go out to their families.
The tragedy of this attack highlights the urgency to deploy
the UN's heavy support package and the UN/AU hybrid
peacekeeping mission--UNAMID--to Darfur as soon as possible.
The United States has been leading this effort. We have been
working with the United Nations to recruit the necessary troop
contributors, and with a few exceptions, the U.N. has received
an abundance of offers. We are also expanding seven of the
African Union's base camps to hold two additional battalions
that will serve as protection for the UN's heavy support
package units. Among other units, the heavy support package
includes engineers from China that will help prepare the
infrastructure for larger deployments of peacekeepers early
next year. We are also providing training and equipment to
African battalions that will deploy as part of the U.N.
mission.
Again, the Sudanese Government has publicly accepted U.N.
Security Council Resolution 1769 and has pledged cooperation
with its deployment. We will hold them to this pledge. The key
leaders of UNAMID are already on the ground. The UN/AU Joint
Special Representative Adada and UN/AU Force Commander Agwai
are already in place. We have warned the Government of Sudan
that we are watching closely and that we will insist on nothing
less than full cooperation, from flight and customs clearances
for U.N. equipment, to the rapid provision of entry visas for
deploying personnel.
The heart of the solution in Darfur is an inclusive
political agreement, and the United States is sustaining its
efforts to achieve that end. There can be no military solution.
I was present in Abuja, Nigeria, when the Government of Sudan
and Minni Minawi, leader of the Sudan Liberation Movement,
signed the Darfur Peace Agreement on May 5, 2006. The DPA is a
fair agreement which addresses the core grievances of the
people of Darfur. Unfortunately, at the eleventh hour, some
parties became intransigent and refused to sign. We have all
learned from that process.
The United Nations and African Union are providing renewed
leadership, and their efforts are making headway. The new talks
are scheduled to begin on October 27th in Libya. The U.N. and
AU have incorporated the regional countries into the process
and are formulating a mechanism to fully include civil society,
tribal leaders, and representatives of the internally displaced
persons camp.
Senator Menendez. Madam Secretary, if I could get you to
sum up for us.
Ms. Frazer. Yes, certainly. The first order of business in
Libya should be to strengthen the cease-fire monitoring
mechanism.
But at the moment, the splintered rebel factions are
creating obstacles to a peaceful negotiated settlement. Several
of the rebel factions have refused to attend peace conferences,
citing untenable conditions, and others are wary of the
process. And we are working with other international partners
to press all of the rebels to attend the talks.
We have reached a sensitive time in our diplomatic
engagement to achieve a successful political process in Libya.
We are prepared to apply sanctions to any party that obstructs
the peace process. But right now we are trying to work with the
government that has accepted UNAMID, that has accepted to go to
the peace talks, and we are trying to keep the international
coalition that includes the U.S., the Europeans, the African
countries, the Arab countries, and, most importantly, the
United Nations and the African Union on board with our effort.
We are concerned about Darfur, but we also have to be
concerned about making sure that the Comprehensive Peace
Agreement is also fully implemented, and we must ensure that
our efforts today will reinforce CPA implementation.
While much has been accomplished during the nearly 3 years
since its signing, the progress of the CPA has faltered in
areas related to the North-South border, Abyei, oil revenue
sharing, and the redeployment of forces. We will continue to
lead efforts to address these challenges. Deputy Secretary
Negroponte met with the Sudan contact group on Friday,
September 21st, to refocus international attention on the CPA,
and we are in constant discussion with the government of
Southern Sudan, and now Special Envoy Natsios is on the ground
today in Southern Sudan pressing for full implementation of the
CPA. We will continue to work with the Intergovernmental
Authority on Development, the Sudan contact group, as well as
the new Special Representative for Sudan, Mr. Qazi, to try to
bring renewed focus to implementation of the CPA.
The United States, in conclusion, has and will continue to
lead the world in responding to the situation in Sudan. We have
provided over $4 billion in assistance to Sudan since 2005.
While we are successfully increasing pressure on the Government
of Sudan, we must also recognize that these efforts and any
future efforts may impact the Government of Southern Sudan, as
their delegation told us this week. As part of the CPA, the
Government of Southern Sudan receives tens of millions of
dollars in oil revenue each month from the central government
in Khartoum. This influx of resources is unprecedented in a
post-conflict situation and has allowed the Government of
Southern Sudan to participate with the international community
in the development and reconstruction of Southern Sudan.
We share the commitment of Congress and the American people
who are working to see an end to the suffering of the Darfur
people. We, together with Congress' ongoing support, will
continue to exert all our efforts until the crisis in Darfur is
ended and all the people of Sudan can live in peace.
Thank you, Mr. Chairman. I am pleased to answer questions.
Senator Menendez. Thank you. Again, your full statements
will be entered into the record, and I would ask you to
summarize them in the context of 5 minutes.
Secretary Dibble.
STATEMENT OF ELIZABETH L. DIBBLE, PRINCIPAL DEPUTY ASSISTANT
SECRETARY FOR INTERNATIONAL FINANCE AND DEVELOPMENT, DEPARTMENT
OF STATE
Ms. Dibble. Mr. Chairman, Ranking Member Shelby, and
Members of the Committee, thank you for the opportunity to
appear before you today to discuss some aspects of possible
sanctions measures concerning Sudan.
Sanctions seek to change behavior. To be effective, they
must be carefully calibrated and coordinated. Naturally, timing
and messaging are essential components of this process. The
administration and Congress together need to maintain a unified
message on Sudan policy to maximize U.S. influence on the peace
process. This is particularly true since the administration and
Congress fully share the same objectives in Sudan--in
particular, our common desire to end the violence in Darfur.
But sanctions are only one part of the approach which also
has to rely upon multilateral diplomacy and eventually changed
behavior by the Khartoum regime itself. We have to ensure that
our desire to send a strong message via sanctions does not
counteract or even overwhelm progress on the political fronts.
We have serious concerns about attempts to apply new
sanctions on the Government of Sudan now at this moment. It
would send the wrong message to the regime at a time when it is
actually being helpful with peace talks and with the African
Union/UN peacekeeping force. It would also send the wrong
message to rebel movements, one of which just attacked an
African Union peacekeeping base and killed 10 Nigerian
peacekeepers. The rebels need to join the peace process rather
than targeting international forces.
Our most recent action on Sudan sanctions got the attention
of Government of Sudan officials without undermining our
multinational coalition on Sudan, and it was this increased
pressure that helped bring us to where we are today.
Required divestment will be seen by our allies as a U.S.
Government action targeting their companies and could affect
our ability to obtain cooperation on mutual action with respect
to Sudan. Some of these key allies will be providing troops and
equipment for the African Union/UN hybrid peacekeeping force.
We need to look carefully at each of the Sudan bills and
consider all aspects of their likely impacts, including on
Southern Sudan and on multinational coalitions. We need a
multinational coalition that includes the Chinese, the Arab
world, the Europeans, and the African Union to build peace in
Sudan.
We recognize that individuals and particular funds may want
to divest certain holdings for a variety of reasons. In fact,
we do not take a position on private independent action by
individual investors based on private sector research and
analysis.
However, the administration is opposed to affirmative
Federal legislation that explicitly authorizes divestment
campaigns at the State and local level. Sanctions policy needs
to respond quickly to rapidly evolving events. Having one
unified foreign policy gives us the flexibility to do this.
State and local divestment efforts risk creating the appearance
of a multiplicity of foreign policies, undercutting our policy
flexibility and the clarity of the messages we send foreign
governments. They also undermine the President's constitutional
responsibilities to conduct foreign affairs for the Nation.
The Sudan bills under consideration all seek ways to use
U.S. economic leverage to have an indirect impact on Sudan's
leaders by pressuring foreign companies that do business in
Sudan. The primary approach in certain bills would have the
U.S. Government create a black list. This is the most troubling
approach. The administration has consistently opposed all
requirements that the President or Treasury or any other U.S.
Government entity affirmatively prepare a black list
periodically of companies doing business in Sudan. Such a list
would target our allies, impairing multilateral efforts to aid
the peace process.
Another concept in play is a new SEC disclosure process. A
third concept is an as-of-yet-unarticulated U.S. Government
contracting certification procedure and procurement ban on
prospective contractors who cannot certify that they either
have no specific business activities in Sudan or, if they do,
that they meet certain humanitarian criteria. These latter two
proposals also pose some concerns, but we remain open to
exploring them further as alternatives.
In summary, sanctions are an important policy tool, but
they need to be managed with maximum flexibility. Timing is
everything, and we believe it is imperative to preserve the
President's flexibility to decide when and how to calibrate the
application of sanctions to they can work to the maximum
advantage.
We look forward to our continued dialog with the Congress
to ensure that sanctions are applied at the appropriate time
and in ways that do not undermine the multilateral efforts
which are essential to achieve our policy objectives for Sudan,
including ending the violence in Darfur.
Thank you very much.
Senator Menendez. Thank you, Madam Secretary.
Director Szubin.
STATEMENT OF ADAM J. SZUBIN, DIRECTOR, OFFICE OF FOREIGN ASSETS
CONTROL, DEPARTMENT OF THE TREASURY
Mr. Szubin. Thank you, Mr. Chairman, Ranking Member Shelby,
and Members of the Committee. Thank you for your continued and
intent focus on the suffering and crisis in Darfur and for the
opportunity to speak to you today about the tools we can bring
to bear on this difficult problem.
I know that this is an issue of vital and deep
immunoglobulin to the Members of this Committee, to Congress,
of course, to the administration, and to the American people as
a whole. I believe, in fact, that it is a testament to the
character of this country that so many people in every part of
this Nation feel the suffering of the victims and refugees of
Darfur as their own and are seeking desperately to help.
From my first days in this position, I was tasked to
develop and apply additional sanctions measures to help
alleviate the crisis in Darfur. The President and Secretary
Paulson made clear that we should spare no effort and draw on
all of our authorities and resources. Our objective has been to
encourage a negotiated resolution to this crisis by making
clear to the Government of Sudan and other responsible parties
that defiance of the international community will come at a
heavy cost.
Economic pressure has played a role in encouraging a
resolution to this difficult and complex situation. As you
know, the United States has had broad economic sanctions
directed at Sudan since 1997 based on the Government of Sudan's
support for international terrorism and human rights
violations. In 2006, we acted with the U.N. to impose targeted
economic sanctions against culpable individuals responsible for
violence and undermining stability in Darfur.
This past April, on Holocaust Memorial Day, President Bush
issued a clear warning to the Sudanese Government: either they
would live up to their prior commitments and allow the
deployment of a joint UN/African Union peacekeeping force or
the United States would impose further economic sanctions on
the Sudanese Government and seek a U.N. Security Council
resolution to do likewise.
When President Bashir did not follow through, President
Bush did. On May 29th, Treasury announced a range of new
sanctions. We designated two senior Sudanese Government
officials that had acted as liaisons between the government and
the Janjaweed militias, including their chief of military
intelligence and their minister for humanitarian affairs. We
also targeted Azza Air Transport Company, which had been
conveying artillery, small arms, and ammunition from Khartoum
to Darfur. The government has not been the only culpable party,
of course, and we also designated Khalil Ibrahim, the leader of
a rebel group responsible for violence in Darfur.
On that same day, we designated 30 additional companies
owned or controlled by the Government of Sudan, thereby
disrupting their access to the U.S. economy and the U.S.
dollar. These companies included five petrochemical companies,
Sudan's major telecommunications company, and a company that
had supplied armored vehicles to the Sudanese Government for
use in military operations in Darfur. In addition to these
actions, we significantly stepped up our efforts to enforce
sanctions on Sudan sanctions, making this enforcement a top
priority within OFAC, my office. We are now aggressively
pursuing a number of violators to ensure that compliance with
these sanctions is as strong as the sanctions provisions
themselves.
Congress and this Committee have played an instrumental
role in facilitating these actions. Indeed, just yesterday
morning, Congress passed a bill, sponsored by Chairman Dodd,
which provides for significantly increased civil penalties for
those who violate IEEPA--the core statute under which we impose
sanctions against Sudan, as well as terrorist financiers, WMD
proliferators, Iran, Burma, and other sanctions targets.
Without question, this bill will make our sanctions more
effective, and I would like to thank this Committee, as well as
others in the House and Senate, including Senators Durbin and
Brownback, for their strong and swift support in passing this
bill.
Two months after the sanctions I just described, with the
leadership of the United States, the U.N. Security Council
adopted an important resolution which my colleagues from the
State Department have already described. Thus far, there have
been positive indicators. As Assistant Secretary Frazer will
describe in more detail, the Sudanese Government publicly
announced its acceptance of a hybrid peacekeeping force, which
is unprecedented. And later this month, she and my colleague,
Assistant Secretary Dibble, described the peace conference that
will be held in Tripoli, Libya, which will hopefully bring all
of the parties of this conflict together and move them in the
direction of settlement.
While there have been positive recent developments, the
diplomatic road ahead will no doubt require patient and
difficult work. For our part, we stand ready to provide
whatever support is needed to pressure those who would stand in
the way of peace.
I know that this Committee has been watching these issues
very closely and is considering additional Sudan-related
measures. I look forward to answering your questions both with
respect to the actions we have taken to date and additional
policy proposals, and I look forward to continuing to work
together with you to address these critically important issues.
Thank you.
Senator Menendez. Thank you, Director.
We will start a round of questioning of about 5 minutes
apiece, and then we will see if there is need for a second
round. I will start off myself.
Mr. Szubin, in May, the Committee marked up and approved S.
1612, the International Emergency Economic Powers Enhancement
Act, which vastly increases penalties on companies that violate
U.S. sanctions law. The Senate approved the bill unanimously in
June. The House passed it yesterday. The President, I
understand, is going to sign it rather swiftly.
Now, your Department strongly endorsed that bill, did it
not?
Mr. Szubin. Yes, sir.
Senator Menendez. And from what I understand, you all
believe that it should be enacted without delay. Is that the
case?
Mr. Szubin. Yes, sir.
Senator Menendez. Secretary Frazer, the State Department
also supported that bill, did it not?
Ms. Frazer. Yes.
Senator Menendez. And, in fact, not only did you support
it, but in view of the fact that the administration wants it
enacted into law, that is going to take place even though the
talks in Libya are about to happen. Yet you come before the
Committee and you collectively cite that you oppose this
legislation because, I think, Secretary Dibble, you mentioned
timing and messaging.
What is the difference? You have a sanctions regime that
you are all enthusiastically pursuing before the peace
conference in Tripoli, and yet you are back-pedaling on this
effort, particularly as it relates to Sudan.
Mr. Szubin. If I could, Senator, the key legislation which
the Congress just passed yesterday would enable us to crack
down more firmly on those who violate our sanctions, our
existing sanctions on Sudan, as well as our other sanctions
programs, such as those I mentioned--Iran, Burma, terrorist
financing, WMD proliferation, and narcotics trafficking. It is
an authority that we have desperately needed for years,
frankly. Our sanctions penalties were out of date such that if
somebody issued a series of transactions, exported goods, or
facilitated financial flows to Sudan that were prohibited, they
might get away with a slap on the wrist. And we cannot have our
sanctions be viewed as--a penalty would just be a cost of doing
business.
So we asked and we were very grateful to Congress for
supporting that, but I do not view this measure as coming in
any way into conflict with the ongoing diplomatic processes
which are going on, as you mentioned, in Libya. What these will
do is allow us to enforce meaningful penalties on those who are
violating----
Senator Menendez. I fully understand that, but the point is
you want that enforcement because you want to send a very clear
message that sanctions can work and have a consequence. Is that
not the case?
Mr. Szubin. Absolutely.
Senator Menendez. Then that is my point. Sanctions can work
and they have a consequence. But here, as it relates to Darfur,
the State Department seems to mean in its testimony to be
overly optimistic and overly sensitive to upsetting the Bashir
government.
Isn't it not true, Madam Secretary, Secretary Frazer, that
Bashir has time and time again told the international community
that he would do X, only to back-pedal and not make that
happen?
Ms. Frazer. Yes. Sanctions----
Senator Menendez. Yes. But the point is then, if the answer
to that is yes, then it seems to me that you would want to have
all the leverage possible at the end of the day to have him
understand that we are serious about the consequences--it does
not mean you have to invoke them, but you have a tool in your
arsenal, an arrow in your quiver to be able to use. And I do
not understand exactly--what I have not heard from any of you,
really, outside of the generic context of timing and messaging,
you know, the focus of this legislation you really have not
attacked in terms of its specifics.
You know, there are four distinct sectors of the Sudanese
economy that are linked to supporting policies which have
contributed to Darfur policy: oil, mineral extraction, power
production, defense. This is not a blanket divestiture measure.
Furthermore, the legislation specifically carves out
business investments in the South where we are hopeful for
progress.
Thirdly, the legislation before the Committee is
specifically written to expire when the requirements for all
corresponding Federal sanctions are satisfied.
And, fourthly, in addition to helping apply pressure to the
Sudan, the legislation is meant to ensure that socially
conscious investors have the right--the right--to refrain from
investing in business operations that contribute to genocide.
I cannot quite understand how the State Department comes
before this Committee and says this is inappropriate.
Ms. Frazer. Perhaps I can answer some of what you have
asked. I think it is important to be very clear that the
sanctions that were imposed on May 29th are having effect, and
the enforcement of those sanctions from 1997 has increased and
is having an effect, specifically the sanctions that Adam
Szubin, I must say, has been really very effectively applying,
and which the IEEPA legislation will give him even more ability
to tighten the rope around this Government, is the reason why
the Government of Sudan has accepted UNAMID today. They are
effectively shutting down the banking system in Khartoum today.
We have the necessary pressure based on the sanctions that we
imposed on May 29th.
And so what I would say is, in terms of the specific
legislation, my concern about it is, frankly, the additional
work that it is putting on OFAC when we need OFAC to be looking
after identifiers of Government of Sudan officials to further
tighten the impact on that government instead of going through
a list of companies, you know, trying to find a list of
companies which have a diffuse impact. What we need is the
targeted impact that he is already applying due to the May 29th
sanctions, which are having an effect.
The second point I would make in terms of the issue of
timing is that indeed we do have to keep this coalition. If the
Government of Sudan starts backtracking, which is the way it
does--I mean, there is absolutely no doubt about it. This is a
government that makes an agreement and then tactically starts
to put road blocks in the way. If they start that process, then
we have the sanctions necessary, and we may come back to you.
In fact, this legislation could be fine-tuned so that we could
put the necessary pressure.
I think it is important to say, however, that right now the
ball is in the UN's court. The issue of getting those
peacekeepers on the ground is really one that we have to put
the pressure on the U.N. and keep our dialog with the U.N. That
is where the obstacle is, as well as on the peace process. The
ball is in the rebels' court on the peace process. And so we
need to be clear about when we use the sanctions, it is to
impact this government for its negative behavior. But at this
moment in time, the ball is not in the Government of Sudan's
court.
I am sure that they will backtrack, so I think that we have
to be at the ready with new sanctions. But we also have
effective sanctions right now that are putting the necessary
squeeze on this government.
Senator Menendez. Well, I appreciate your answer. The
legislation actually calls for additional assistance to OFAC to
be able to meet its challenge. And, second, it seems to me that
whatever refinement you want to suggest, you suggest to the
authors and to the Committee, because it is my sense that this
will move forward.
The distinguished Ranking Member, Senator Shelby.
Senator Shelby. Thank you.
Do any of you have an estimate of the amount of revenue and
the percentage of GDP that the Sudanese Government derives from
foreign investment and trade? Do you, Mr. Szubin?
Mr. Szubin. I do not.
Ms. Dibble. No.
Senator Shelby. Could you furnish that for the record?
Isn't that important? You need to know what they are doing and
how important this is to their GDP if it is going to work.
Do you have any idea as to the extent that the Sudanese
Government is dependent on funds like that for the financing of
its actions in Darfur? In other words, is there a connection
between financing their actions and something we can do about
it by sanctions?
Mr. Szubin. I do not have----
Senator Shelby. Do you need what I am asking you?
Mr. Szubin. Of course, Senator, and I do not have the
figures with me today.
Senator Shelby. Could you furnish that for the record?
Mr. Szubin. Yes. It is unquestionably true that foreign
investment, particularly in Sudan's petrochemical sector, is
the major source of funds for their government, and it allows
them----
Senator Shelby. It is a great percentage of their GDP, is
it not?
Mr. Szubin. Yes, sir, it is.
Senator Shelby. And you are really talking about oil and
petro dollars, are you not?
Mr. Szubin. Yes, and that is one of----
Senator Shelby. Oil and gas.
Mr. Szubin. Exactly. That is one of the reasons we have
focused on that sector so intently with our sanctions. So just
to give you an example, not only have we recently in May named
five of their state-owned petrochemical firms, but in the past,
we have gone after conglomerates that the Government of Sudan
controls but that are co-owned by Chinese, by the Malaysians,
by the Indians, to target all of the major Sudanese petro firms
and say, ``You are not going to do any business with the United
States, and we are going to try to disrupt your business that
you are doing anywhere in the world.''
Senator Shelby. Is there evidence regarding the conduct of
U.S. and foreign companies operating in the Sudan? In other
words, that the companies targeted for divestment at the State
and local levels are actually altering their behavior? Is there
anything going on there? Do you measure that in any way?
Mr. Szubin. With respect to the impact of State divestment?
Senator Shelby. Yes.
Mr. Szubin. I am not aware of that.
Senator Shelby. You do not have any----
Mr. Szubin. I do not have that evidence, no.
Senator Shelby. Secretary Dibble, China's role is very
central to all of this, as some of us see it. How has China
reacted to the targeting of PetroChina and its parent company,
China National Petroleum Company, by the divestment campaign?
Have they changed their behavior in any way, or does oil trump
everything, oil and gas? Have you seen any indication that
Pakistan, India, Malaysia, or any Federal Government country is
incorporated concern for human rights into its foreign
investment policy?
Ms. Dibble. I am not aware of any specific reaction from
the Chinese on this particular issue. I do know that this has--
our efforts and our sanctions--and I am talking more broadly
than just the Sudan sanctions, but our sanctions across the
board have gotten the attention of foreign governments. And as
Assistant Secretary Frazer said, you know, we need some of
these very governments to help us in the coalition.
So I think they have taken notice of this. I am afraid I
cannot quantify what that reaction might be. But I think they
have taken notice.
Senator Shelby. A lot of you here at the table, you are
experts on the situation in Sudan because of your
professionalism. Could you tell us what form you believe any
potential legislation should take? In other words, I believe we
are going to pass a strong bipartisan piece of legislation
coming right out of this Committee, and it has got to be
meaningful. If it is not meaningful, it is useless; it is
worthless. It is just a statement with no teeth, and we do not
want that.
What do you want? Is the administration out of sync with
the Congress on this?
Mr. Szubin. I do not think so at all. I think, in fact, in
my conversations with your staffs and others on this Committee,
we have exactly the same objectives here, which is, How do we
get down this very difficult road of a negotiated peace
agreement and ensure that we do not see people veering off the
road, as they have in the past? And how do we make sure that
people see the costs and the very significant costs of
misbehavior? So in terms of being in sync, very much so,
Senator.
In terms of what additional legislation would be needed,
whenever we have been asked in the past, we said we need
stronger penalties. We need to make sure our sanctions are
enforced and----
Senator Shelby. It has got to have teeth, has it not?
Mr. Szubin. It has to have teeth, and Congress responded
very swiftly, and I just want to thank you all again for the
support with respect to that, because we asked and you
delivered as quickly as could have been expected.
When it comes to applying additional proposals on top of
that, my colleagues from the State Department, of course,
talked about the timing and the very delicate process that is
coming right now. And what we are hearing from the government,
at least what we are hearing right now, is exactly what----
Senator Shelby. Explain what you mean by ``delicate.'' I
mean, people are dying every day.
Mr. Szubin. That aspect----
Senator Shelby. People are looking the other way. So what
is delicate about doing something about this or trying to do
something about it?
Mr. Szubin. This is something where my colleagues will be
able to speak more articulately than I, but just to give one
example, the U.N. Security Council Resolution 1769, which just
passed late this summer, was a 15-0 vote, if I am not mistaken.
In other words, we had consensus, including from the Chinese,
that we need to deploy peacekeepers, that the situation in
Darfur requires a serious response. And that is a remarkable
accomplishment thanks to the diplomats sitting at this table
and others in our Government.
Senator Shelby. You do not believe that China has any
interest in sanctions against their own China Petroleum
Company, do you?
Mr. Szubin. I am sure they do not. And these kinds of
targets, state-owned companies, present a particularly
difficult challenge when it comes to economic pressure. If you
take the Malaysian company, Petronas, which is operating there,
they are, frankly, not subject to economic pressure. They are
not traded on any exchange in the world, certainly not on any
U.S. exchange, and U.S. investors are not holding their stock.
And so there is a limit to how much pressure we can apply
financially to address that situation. I think ultimately it
comes down to what can we do diplomatically to convince them to
either change their ways or use their influence and their
leverage within the Sudanese economy for good and to be
pressuring the government that we all need to see a change in
behavior, we all need to see peace in Darfur.
Senator Shelby. Well, whatever we have been doing is not
working, is it?
Mr. Szubin. Well, I think the recent months----
Senator Shelby. The slaughter is still going on.
Mr. Szubin. The situation there has gone on longer than it
ought to have and longer than any of us would have liked to
see. The developments over the last few months, which Assistant
Secretary Frazer will speak to, are among the more positive
that we have seen recently, and the government seems to be
saying what we would like it to. It is a question now of
follow-through. I would turn it over to Assistant Secretary
Frazer.
Ms. Frazer. Yes, Senator Shelby, I will speak to
specifically the delicacy of this moment in time. I think it is
on two levels: one, what is going on in Sudan itself; and,
second, in terms of the international coalition, which has been
extremely difficult to build.
In the Government of Sudan, it is a very divided
government. The pragmatists right now are in the ascendance.
They have convinced those who would pursue an end to this
through military means that, in fact, allowing the peacekeepers
to come in is the right way, going to the negotiating table is
the way to end this crisis in Darfur, as well as to end their
isolation internationally, at least their isolation in the
Western world, because they are not exactly isolated
internationally--which comes to my second point, which is the
international coalition. The most important thing that we could
do today is to get other countries on board with further
sanctions, to put multilateral sanctions, because as long as
the United States has unilateral sanctions--in fact, we are
shutting down their access to the dollar economy, they are just
moving it to euros now. You know, they just find banking
outlets in the Middle East.
And so we have got to get other governments on board with
us, and if we are seeing, as when the Government of Sudan has
accepted UNAMID and has accepted to go to the peace table to
negotiate peace, if we are seeing this, now imposing yet
another set of sanctions when we have very effective ones in
place at this moment in time, we probably will lose that
international coalition. Or the coalition, which is not very
firm anyway, we have to keep it on board. And so that is what
we mean by the delicacy of the moment.
But as I said, I think that we have to be ready because we
do know the character of this government, which backtracks
constantly.
Senator Shelby. This government is the problem, is it not?
They aid and abet the militia. They aid and abet everything. I
wish you well.
Thank you for letting me go over on my time.
Senator Casey [presiding]. Thank you, Senator Shelby.
Senator Reed.
Senator Reed. Thank you very much, Mr. Chairman.
Secretary Frazer, do you feel that the recent attack on the
peacekeepers force was either condoned or encouraged by
elements within the government in Khartoum?
Ms. Frazer. I do not think it was condoned and I do not
think it was encouraged, but it is an interactive process. And
I think that there is no justification for the attacks. And one
explanation--we are still trying to gather information on what
happened and why. But one explanation is that these were break-
off rebel groups who were seeking supplies, equipment, and so
they attacked the AMIS to get those supplies and equipment.
Another is that when the rebels attacked the government
police and killed some 51 police in Kurdufan, the government
responded militarily, and that this was then a counterattack
with the rebels believing that AMIS was not--took the side of
the government. And so it is the dynamic. And so whereas, I do
not think the Government of Sudan aided or abetted or
encouraged this attack, I do think that the Government of
Sudan's action is part of the context, the reason for this type
of back-and-forth between the rebels and their attack on AMIS.
It is not excusable.
Senator Reed. So your at least working conclusion is that
the Khartoum government will cooperate with the deployment of
the peacekeeping force.
Ms. Frazer. My experience is that we will have to continue
to put pressure on this government at every moment in time to
make sure that they cooperate, because it is a divided
government. There are those who support UNAMID fully, and then
there are those who absolutely oppose it. And it is a
tactically oriented government, and so we have to continue to
keep the pressure on the government. That is my experience.
Senator Reed. Well, I think we all sort of share your
conclusion. I think the debate here is what kind of pressure
from what direction, et cetera, because frankly I think the
heart of the proposal of Senators Durbin and Brownback and
others is that this is more pressure continuously applied, and,
in fact, it is the type of pressure that might get their
attention since it is not the carefully calibrated pressure
that the administration is applying. It is much more blunt. And
with all due respect, the ``delicacy'' and the ``regime in
Khartoum'' are words I do not assume to hear in the same
paragraph. But I know what you are saying, you know, that this
is a pretty difficult situation to manage.
Director Szubin, the sanctions that are in place today
would prevent these companies and individuals from doing
business with American companies, and likewise American
companies doing business with these individuals and companies.
Is that a fair summary?
Mr. Szubin. Yes, Senator.
Senator Reed. Would it prevent American companies from
investing in these companies?
Mr. Szubin. Yes, Senator.
Senator Reed. So a pension fund in Rhode Island or Illinois
now under this could not invest in these companies directly or
indirectly. Is that true?
Mr. Szubin. Right.
Senator Reed. Is that clear to--do you think that is clear
to the public out there that this is the case?
Mr. Szubin. I think it is, and we engage in a great deal of
outreach to try to educate the public, both the normal sectors
that we deal with, whether it is the trade community or the
financial community, as well as others with respect to what are
the contours of our sanctions and what are the prohibitions.
But not only can no U.S. person conduct any business or invest
with the companies that we have named; they cannot conduct any
business with any Government of Sudan-owned or -controlled
company, and any assets of those companies have to be frozen if
they come into the possession of a U.S. person, which would
include a U.S. person overseas. If there is a U.S. bank in
Europe or in the Far East that comes into the possession of a
wire transfer that is going to one of these companies or coming
from one of these companies, that money needs to be blocked and
frozen.
Senator Reed. So effectively you have a list of these
companies. Some of the discussion today is that we do not want
a list published of these companies as the legislation would,
but there is a list of these companies, correct?
Mr. Szubin. Correct. If I could, there are, I think, two
different lists that have been discussed. We maintain a list of
Government of Sudan-owned companies where we are targeting at
Sudan itself. There has been discussion of and I think some of
the legislation would call for creating a list of non-Sudanese
companies, third-country companies in Europe or elsewhere that
are doing business in Sudan--what some people would call a
``secondary sanction''--and that list currently does not exist.
At least under the Government letterhead it does not exist. I
know there are many private nongovernmental groups that look to
lists like that, that have developed lists like that, and that
are using them.
Senator Reed. Well, as I think you suggested in one of your
previous responses, most of these Sudanese companies are not
listed on any stock market, that there is no ability to invest
in that. That is correct, isn't it?
Mr. Szubin. By and large, the large petrochemical companies
that we are talking about are not listed, certainly not in the
United States.
Senator Reed. Well, let me ask it another way. That is, are
there any companies--this goes to sort of, I think--maybe we
already have this policy in place. Are there any companies that
are publicly traded that you have listed or put on a sanctions
list?
Mr. Szubin. I am trying to think, and I do not want to
answer incorrectly. I do not know of any of these Government of
Sudan-owned companies, and here we are primarily talking about
companies that are operating in Sudan, in Khartoum or in the
oil fields, that are traded on--certainly not on a U.S.
exchange. They would be prohibited from doing that. But I do
not know of others that are traded on, say, a European
exchange.
Senator Reed. It seems to me that, you know, this is a
question of how much is enough in some respects, which,
clearly, you and your colleagues are trying to put pressure on
the regime. But it would seem to me that--and I do not know the
direction of investment flows, but whatever inhibitions that
are felt by these companies are more than made up with by
foreign investors, private companies coming in and putting
money into the oil fields. And at the heart of what I think our
colleagues are trying to get at is trying to cutoff that flow
of funds, too, which would send a very strong signal to the
Government of Sudan. But thank you for your efforts.
Thank you, Mr. Chairman.
Senator Casey. Senator Bunning.
Senator Bunning. Thank you. I look at the questions that I
have, and at least four of them have already been asked.
Why would it be counterproductive to allow States and local
governments to make their own laws on businesses dealing with
other countries? Any of the above.
Ms. Dibble. Senator, we are not opposed to private
divestment actions. As some of your colleagues have noted,
there is divestment taking place in various States, and they
are looking at this. We have never said we have opposed that.
What we are opposed to is legislation that affirmatively
authorizes State and local government divestment because of the
concern that it creates a multiplicity of State and local
government foreign policies that could potentially impact on
the President's ability to direct the foreign policy of----
Senator Bunning. But as long as there is an overriding
sanction by the Federal Government, don't the State and local
governments have to comply?
Ms. Dibble. Yes, they would.
Senator Bunning. Yes.
Ms. Dibble. Yes, they would.
Senator Bunning. Well, is there anything to prevent State
and local governments from going more stringent than the
Federal Government?
Ms. Dibble. No, and I think in some cases--if I understand
the question, Senator, in some cases they are doing that now.
Senator Bunning. Given the problems that the Securities and
Exchange Commission had assembling a list of companies doing
business in terrorist countries, could the Government make a
more accurate list of companies doing business in Sudan?
Mr. Szubin. Well, I will try to answer that. As I mentioned
a few moments ago, these lists----
Senator Bunning. The private----
Mr. Szubin. The private lists are out there, and I believe
the Sudan Divestment Task Force will be testifying on the
subsequent panel. They issue a list that I think is updated
quarterly with respect to the activities of foreign companies
that are investing in Sudan in particular sectors and that have
not complied with a whole set of criteria with respect to their
business and their humanitarian profile.
When it comes to the Government going in and trying to
reinvent that wheel, issue a list of their own, you sort of get
into the question of what are the additional benefits of having
a Government list and what costs would come with it. And the
costs include the foreign policy concerns of the U.S. beginning
to blacklist, if you would, European or Asian companies and
exactly those governments whose support we are going to need to
keep the pressure on in Khartoum. The costs would also come in
the form of just the very serious logistics costs that the
Government would bear, logistical hurdles that we would bear in
trying to put out this kind of list, because the kinds of
information that we draw on in analyzing flows or trade flows
into Sudan are, for the most part, classified. So, of course,
we are not going to be able to put out information that is
derived from classified information.
When we are looking to the public information, which the
private sector has access to, we would need to limit ourselves
to that which we think is solidly sourced and corroborated and
reliable before we could, of course, put a Government seal on
it and say here is our list.
So I think at the end of the day, you would see a much
shorter list if it came out from the U.S. Government than those
which are already in circulation.
Senator Bunning. Secretary Frazer, I have got to ask you,
why is it difficult to get other governments to act in
conjunction with the United States if they actually know what
is going on in Sudan?
Ms. Frazer. Senator, unfortunately, many governments do not
know what is going on in Sudan.
Senator Bunning. Well, I mean, we do.
Ms. Frazer. We do.
Senator Bunning. And certainly is our credibility that
bad--are you as an entity in the State Department so bad at
explaining to other governments the horrific goings-on in Sudan
right now?
Ms. Frazer. No. But Secretary Rice has certainly done a lot
to build the coalition that led to the 15-0 Security Council
resolution that authorized the peacekeeping force. But the
Government of Sudan goes to the Middle East, claims its
sovereignty, and says to the other countries in the Middle East
that they should not have international peacekeepers on their
territory. They raise issues of----
Senator Bunning. But, then, what action should the U.S.
Government take toward those other countries, if anything?
Ms. Frazer. Well, we certainly take action to convince them
and we have been successful in building that coalition to
convince them to stay with us, and that is what we are trying
to maintain. But there are many issues in the world that we
need these governments' engagement on. Sudan is one of the
issues. And so we have to continue with multilateral diplomacy.
And as I said, the Secretary has done an effective job of
getting Egypt, Saudi Arabia, Libya, South Africa, and many
other countries on board with our approach.
Senator Bunning. One last question, and I am sorry this is
just a little over my time. There are an awful lot of American
people that know what is going on in Sudan. What can the
average American do to help, in sanctions, in--in other words,
you cannot volunteer to go to Sudan as a peacekeeper--or can
you? Or what can we as the average Americans do?
Ms. Frazer. Well, I think the average American, I mean, the
young people on our college campuses are being very effective
in keeping this issue at the forefront.
Senator Bunning. Up.
Ms. Frazer. Absolutely. And from our perspective, helping
us to get the resources, you know, with the Congress so that we
can be effective in putting peacekeepers in there, building the
camps that are going to be necessary for where those
peacekeepers are going to live, providing humanitarian
assistance that is necessary.
As I said, we provided about $4 billion over the last 2
years to help on the humanitarian situation, the peacekeeping
front and the peace process. And so I think that the American
public needs to remain engaged the way that they are and keep
pressure on us, including the debate that is going on right
here today at this Committee. I think that this is effective.
It to me is the best of America. We need to look at what are
the various tools that we can use to end this genocide in
Sudan. And so this is one of a number.
What I am saying is that I think that the sanctions from
May 29th have been absolutely effective in changing this
government's behavior, and the government is where we need it
right now. We need to keep the coalition together. But I think
that the debate that is going on here is a healthy one and an
important one, and it is for your deliberation, of course, on
what steps further to take. But, that is, the reflection of
America is right here, I think, in this room today. So those
young people should continue their activism.
Senator Bunning. Thank you very much, Mr. Chairman.
Senator Casey. Thank you, Senator Bunning.
I wanted to pick up, Madam Secretary, where you left off.
First of all, I want to thank you and your colleagues for being
here today and for your public service. Public service is
usually difficult. The kind that you are doing is particularly
difficult. And we do not want to be too combative here, but I
said earlier today that you had a high burden of proof in terms
of making your case, and I think that is still the case.
I wanted to highlight just some excerpts of your testimony
and then also talk about the legislation and have you react to
that.
Secretary Frazer, when you were testifying, you highlighted
a number of things. I think you outlined the challenge we have
in a very full and significant way. But I was struck by a
couple of statements that you made that really, I think, caused
me to question why we are having--why there is such a
disconnect here in terms of our position in the Congress, or
most of the Congress, and the administration's position.
On page 2 of your testimony, you talked about, and I am
quoting, ``A welcome and useful initiative at this juncture
would be for Congress and other concerned groups to issue
statements''--to issue statements--``calling for the rapid
deployment of the UN/AU hybrid force and calling on all parties
to participate in the . . . process.'' So you called for a
statement there.
On the next page, page 3, you highlight, aptly, the chaotic
nature of what has been happening on the ground, citing the
killing of the 10 peacekeepers.
On page 4, in the first full paragraph, the middle of the
page, ``we''--meaning the Federal Government, the U.S.
government--``insist on nothing less than full cooperation.''
And finally, on page 6, you mention that the Federal
Government, the U.S. Government has provided over $4 billion in
assets to Sudan since 2005.
Secretary Dibble, in your testimony, in the first
paragraph, ``Sanctions seek to change behavior,'' which you
mentioned. You talk on page 2 about increased pressure that has
helped to bring us where we are today.
My point in all of this is that there is some common ground
here in the sense that we all agree that sanctions and economic
pressure and other kinds of pressure do work, and you are
seeing some results from that, and we appreciate that. We
appreciate the difficult situation the administration is in and
the work that the administration has done to date.
But I have to tell you, when you juxtapose those statements
and that, I think, agreement between the debate we are having
today, you juxtapose that next to the basic provisions of the
Senate--at least the Senate bill that I have cosponsored,
Senator Durbin's legislation--and I will just highlight a
couple of provisions that were in his testimony and ask you to
comment.
One of the elements of this legislation is to first require
the administration to create a list of companies supporting the
Sudanese regime. I cannot understand why that is a big problem.
Also, requiring those companies to report to the SEC. Third on
his list, requiring the administration to report on the impact
thus far of current economic sanctions. Just asking for the
administration to report on the impact.
Further down in his list, authorize State and local
governments to divest from companies supporting the regime. I
realize that is controversial. I will get back to that in a
moment.
Further down the page, increasing civil and criminal
penalties for sanction violators.
Another provision, studying how the Federal employees'
Thrift Savings Plan can create a terror-free investment fund.
And, finally, with respect to Director Szubin, authorize
additional funding for the Office of Foreign Assets Control
within the Treasury Department. Now, I have to say I am sure
you are not against that provision.
[Laughter.]
Even as we debate.
But my point is that a lot of what is in this legislation
is, I think--I should say contains requirements that the
Federal Government does every day of the week, requiring
something to be studied, requiring a list, monitoring how a
particular entity is performing. In this instance, you have
sanctions in place, and you have a call for requiring a list of
companies. And on top of all that, when it comes to the local
and State government impact--I was a State treasurer. We have
the State treasurer of Rhode Island here. We know that when you
walk in the door and say, you know, we might have to remove or
limit our investments in your company, companies respond. We
know that. It is human nature.
But for the life of me, I cannot understand why there is
such a full-court press against this legislation when you go
through the elements of what we are talking about. And I will
stop talking in a moment, and I think this required a statement
and not a series of questions. But when you consider the
frustration, as you have highlighted, the intensity for real
concrete action here, demonstrable progress here that so many
people feel in our country, and you also consider the fact that
what you are saying to State governments, local governments,
pension funds, citizens across America, that you have a tool--
you are putting a tool on the table, you who are in State and
local government and otherwise, and we know that tool probably
will work, but we do not want you to use that tool, and we are
going to prevent you from exercising that option, I just think
it is the wrong policy.
And you talk about having several or many, a multiplicity
of foreign policies here. One of the best ways to sing from the
same songbook, one of the best ways to unify our efforts is to
make sure that the Federal Government gives State and local
governments the authority to do what we know can have an
impact.
So it is a long, long statement and a long question, but I
would like you to take a moment, as best you can, to rebut some
of the elements of this bill in addition--or apart from just
the State and local government divestment issue. Secretary
Frazer?
Ms. Frazer. I would just say--I think that this is really
best handled by my colleagues, but I would just say I support
reporting on the impact of current sanctions that is in the
bill now, because I think that report would tell you how
effective we have been, particularly--the enforcement has gone
up significantly, but particularly since May 29th, and how
those sanctions are choking this government. So I support that
part of the bill.
Senator Casey. So we have got agreement on that. We have
got agreement on that he needs more money for his office.
[Laughter.]
And we agree that economic sanctions and pressure work, so
we are making progress.
Ms. Dibble. I think there is a lot more common ground,
Senator, than perhaps appears. I think we are all working
toward the same goal, and the goal is to keep the pressure on
the Government of Sudan and to keep the international coalition
together. Where we perhaps differ is exactly, you know, how to
get there.
I think some of the elements of this legislation--and we
have talked a bit about the divestment portion of it. I am sure
Adam Szubin is not going to turn down any additional OFAC
funding. We do have--the legislation that was passed yesterday
puts additional teeth into our existing sanctions.
I think the point is we want to be able to continue to
ratchet up and to have the flexibility to apply pressure where
we see it is needed at a particular time. I think the evidence
since May, when the new sanctions were announced, we have
gotten the attention of the Government of Sudan. So I think our
existing sanctions are working. I realize there is frustration,
and there is frustration on our part as well, that the
situation in Darfur is continuing. But we do feel that we are
moving in the right direction, perhaps not as fast as either
you or we would like to move. But we feel we do have the tools
we need right now to continue to maintain that pressure.
Senator Casey. I have to move on, and Senator Brown has
been patiently waiting. Senator Brown.
Senator Brown. Thank you, Mr. Chairman. I just have one
question of Secretary Frazer.
I know of your position. I have read of it. I am sorry I
got here late, and I am chairing for Senator Casey in a moment,
too. But I know that you think this resolution gets in the way
of your diplomatic efforts. What kind of tangible benchmarks of
progress can we expect as a result of the conference in Tripoli
this month? What should we be looking for so that we can
believe that your position is correct?
Ms. Frazer. Well, frankly, I think that we can look at
benchmarks for the conference in Tripoli, but I think that the
more important benchmarks are on UNAMID's deployment. And I say
that because it is by getting a peace force on the ground that
you can create--you can end this chaotic environment, which
then puts more pressure on all parties to effectively
negotiate.
And so I would suggest that the benchmarks be UNAMID, but
if we were going to talk about benchmarks being the Tripoli
talks, obviously it is going to be very difficult, because as I
said, the key block right now is the rebel groups and their
fragmentation. And so trying to get the rebels to the table I
think is critically important. But that is not going to give
you, I think, a benchmark for judging the Government of Sudan's
behavior. They can sit back and say that they are fully on
board with a peace agreement because the rebels themselves are
not coming to the table. If you want something to judge the
Government of Sudan's behavior, again, it is UNAMID. That is
what matters. Is the government going to allow us, you know, to
get the visas necessary? Will the government allow the
equipment to come in? Will the government put up road blocks
for who the peacekeepers will be? Will they start saying this
country is not acceptable, that country is acceptable?
So I would focus on those benchmarks more so than the
negotiations because it is the rebels that are the primary
problem at this point in time. The government can sit back.
Senator Brown. Thank you.
Thank you, Mr. Chairman.
Senator Casey. I think at this moment we will change to the
third panel, and Senator Brown will take over at this point.
Thank you.
Senator Brown [presiding]. Thank you all for joining us. I
will introduce each of the--well, I will introduce four of you,
and my friend, the senior Senator from Rhode Island, will
introduce Mr. Caprio, whom he specifically requested to
introduce. And I will remind each of you that your statements
are in the record if you would like to not exactly read your
statement. It is up to you what you want to do, but we do ask
that you keep it under 5 minutes as we proceed.
Bennett Freeman is the Senior Vice President for Social
Research and Policy for Calvert Investment. He combines his
policy experience as a former Deputy Assistant Secretary of
State for Democracy, Human Rights, and Labor with an extensive
knowledge of socially conscious financial planning to help
administer private asset funds and avoid investments in assets
connected with ongoing violence in Darfur. He was with the
Clinton administration, I believe.
John Prendergast--there are few Darfur experts more
familiar with events on the ground, and he is Co-Chair of the
ENOUGH Project. A frequent traveler to the region, Mr.
Prendergast has widely published on the Darfur conflict, has
led efforts by the International Crisis Group to put forward
definitive assessments and recommendations to addressing the
ongoing crisis there. He is currently Co-Chair of the ENOUGH
Project at the Center for American Progress. Welcome, Mr.
Prendergast.
As President of the National Foreign Trade Council, Mr.
William Reinsch works to represent the interests of the
council's more than 300 member companies. He oversees the
NFTC's work in favor of open markets in support of the Export-
Import Bank, the Overseas Private Investment Corporation, and
many other overseas trade and tax issues of concern to U.S.
businesses. During the Clinton administration, he served as the
Under Secretary of Commerce for Export Administration. He is
also an alumnus of the Senate Banking Committee staff. Nice to
see you, Mr. Reinsch.
Adam Sterling serves as Director of the Sudan Divestment
Task Force, a project of the Genocide Intervention Network,
which works to organize nationwide grass-roots campaigns aimed
at implemented targeted Sudan divestment campaigns at the
local, State, and national level. Mr. Sterling has received a
number of humanitarian awards, also serves as an adviser on
Sudan engagement issues to a number of State pension funds.
I thank all of you for your commitment and your very hard
work on this very, very, very important social justice issue.
Senator Reed.
Senator Reed. Well, thank you very much, Senator Brown. I
am privileged to introduce General Treasurer Frank Caprio for
the State of Rhode Island. Treasurer Caprio is the eldest child
of Joyce and Judge Frank Caprio. His father is more famous, in
fact, than the Treasurer because he is not only a municipal
judge, but he has his television program in Rhode Island. So
tell Judge Caprio we said hello.
His brother, David Caprio, is a State representative, so
this is a family that is committed to public service in the
State of Rhode Island and has been for several generations, and
we treasure their commitment.
Frank is just 41, but has accomplished a great deal
already. After Harvard University where he was captain of the
baseball team and an All Ivy defensive halfback, he went to
Suffolk Law School and got his law degree, served in the Rhode
Island House of Representatives for two terms, then the Rhode
Island Senate. Throughout his career, he has been committed to
advancing the opportunities for Rhode Island citizens, and now
as the General Treasurer, he has been a leader in the effort to
take effective action against the regime in Sudan and to do his
bit to end the genocide there.
I have valued his friendship and support for many, many
years, and it is a pleasure, General Treasurer, to have you
here today. Thank you, Frank.
Senator Brown. Mr. Caprio, would you begin? Thank you.
STATEMENT OF FRANK CAPRIO, GENERAL TREASURER, STATE OF RHODE
ISLAND
Mr. Caprio. Thank you, Senator Brown. And, Senator Reed,
thank you for that kind introduction. And also, thank you for
the invitation to appear here today.
As stressed by Senator Durbin and Senator Brownback, this
issue's time has come. The American people, as we know, are
fair and caring people, and they have led the way on ending
this genocide. The American people know that the children in
Darfur, their stomachs are full of fear, but their hearts are
full of hope--hope about the issue that we are talking about
today.
As an elected official and as an institutional investor of
an $8 billion pension fund, I fully recognize my obligations
and responsibilities. The management and protection of the
funds under my fiduciary responsibility is clear. I am an
investor, not a regulator, and as such, I hold the right to
direct the fund in as accountable a manner as possible.
I testify before you today not to challenge the Federal
Government's exclusive right to conduct the foreign policy of
our Nation, but to make the case that not only is the movement
of State divestment in concert with our Nation's policy on
Darfur, but it is well within the rights of States with
fiduciary responsibilities to their citizens. Let me elaborate
on the latter point.
State pension funds, as some of the largest, singularly
controlled pools of assets in our country today, have at their
service the brightest minds of our financial sectors. We
consider market trends history, the climate on Wall Street, and
countless other variables, but, most importantly, we consider
risk as we devise our strategy for our investments. That
strategy is altered as climates change or trends develop.
Therefore, as prudent investors, we must be able to adjust
accordingly.
The growing divestment movement, now including over 20
States and a multitude of cities and universities, has been
cited by several companies as the reason for their decreases in
their companies' value and, increasingly, as the reason for
their withdrawal from the Sudan.
From a humanitarian perspective, the situation in Darfur is
no secret, and we have heard recently, with the panel before
us, what actions the Federal Government has taken and
recommends.
Targeted divestment not only furthers the objectives of our
Nation's foreign policy, but virtually eliminates the States'
risks. This approach is directly in keeping with current
foreign policy on this issue.
For example, included in our recently passed legislation in
Rhode Island is the statement that no company will be targeted
that has been explicitly exempted from the U.S. sanctions by
the Treasury Department. Additionally, targeted divestment
includes a provision that the bill will sunset when either
Congress declares the genocide to be over, or when the State
Department removes sanctions on the Sudanese Government.
Furthermore, the targeted model protects the States'
financial interests by providing an opt-out clause in which
States possess the right to cease divestment if it has proven
to result in a negative impact on their investment returns.
This legislation in Rhode Island was unanimously passed and
immediately signed by our Governor. At its very basis,
divestment from Sudan represents a choice by the State to
invest its money in concert with the values of its citizens.
Accordingly, States possess both the right and the capacity to
invest based on social, humanitarian, and financial values, as
long as those decisions are consistent with prudent investment
standards.
The targeted approach to divestment followed successfully
in Rhode Island and other States addresses these concerns while
upholding rigorous financial standards. When intelligent policy
is found that addresses a humanitarian crisis while mitigating
financial risks, I feel action must be taken. Targeted
divestment is such a policy, and I am proud to support it.
On the grounds that I am confident that States have not
only the fiduciary right but also the responsibility to divest,
Federal legislation will end this ambiguity and galvanize the
States' right to act on their own as well as in humanity's best
interest.
In summary, this action ensures that we will not allow
genocide to occur on our watch, nor will we allow genocide to
occur on our dollar.
Senator Brown and Senator Reed, thank you.
Senator Brown. Thank you, Mr. Caprio.
There will be a vote around, we think, 11:30, 11:35, 11:40.
We will--oh, they have moved it to 11:55. OK, good. We will not
be interrupted at least for the opening statements.
Mr. Freeman.
STATEMENT OF BENNETT FREEMAN, SENIOR VICE PRESIDENT FOR SOCIAL
RESEARCH AND POLICY, CALVERT GROUP
Mr. Freeman. Thank you, Senator Brown and Senator Reed and
Members of the Committee, for the chance to testify on behalf
of the Calvert Group, a leading family of socially responsible
mutual funds, which strongly supports the targeted divestment
approach.
Calvert has always operated on the principle that
investment can be a positive force in the world. Application of
our human rights criteria ensure that our socially responsible
mutual funds have no investments in companies that contribute
materially to maintaining the Sudanese Government in power. We
have sharpened our focus on Sudan as the crisis in Darfur has
continued and the Sudanese Government has resisted deployment,
until very recently, of the hybrid U.N. peacekeeping force.
We have also been struck by the growing and potential
further impact of the Sudan divestment movement, the most
significant to have emerged since that directed against
apartheid in South Africa.
That is why, at the beginning of this year, Calvert formed
a partnership with the Sudan Divestment Task Force, together
with the Save Darfur Coalition, to lend analytical and advocacy
support to these two groups at a time when their work has
gained even greater momentum and urgency. Calvert fully
supports the approach of the task force and the coalition to
engage with companies where possible, and to divest only when
necessary. Targeted divestment focuses on a narrow group of
companies, mostly in the oil and infrastructure sectors, that
contribute disproportionately to the Government of Sudan's
revenue base and in turn help to facilitate its actions in
Darfur.
Let me emphasize that we at Calvert undertook a review of
the task force's analytical criteria for determining the so-
called highest offenders for targeted divestment, and we found
that criteria to be realistic, credible, and consistent.
As we pursue divestment, particular care, of course, must
be taken to ensure that the legitimate humanitarian needs of
the Sudanese people are not harmed. Essential goods and
services must continue to flow through the traditional sources
that provide aid in Sudan.
With this appropriately sharp focus, the divestment
movement has already been making a positive impact both in
terms of company decisions and the reactions of the Government
of Sudan. The Canadian oil company Talisman withdrew from Sudan
in 2002 in the face of divestment pressure; other oil companies
have followed. The Government of Sudan has indicated time and
again in advertisements in The New York Times and other
statements its concern over the growing divestment movement.
That pressure increased significantly early this year when
two major multinational corporations--ABB and Siemens--followed
shortly thereafter by Rolls Royce, indicated their intention to
cease operations in the Sudan as the direct result of pressure
from the targeted disadvantage movement.
We believe at Calvert that major institutional investors
and asset managers should review their portfolios to determine
whether they hold any companies on the targeted divestment
list, and if they do hold such companies, that they should
probe the specific nature of these companies' operations and
links to the Government of Sudan. They should then judge
whether the companies' continued presence exacerbates the
situation in Darfur or instead can be focused in ways that
might even help mitigate the humanitarian crisis. If the
companies' impact cannot be so mitigated, divestment then, in
our view, may then be appropriate.
It is important to note that of the 500-plus companies
operating in Sudan, only 24 are currently targeted for
engagement and divestment by the Sudan Divestment Task Force
model. The narrow focus of the targeted divestment movement's
objectives should allay concerns related to the ability of an
institutional investment manager to construct a well-
diversified portfolio and thus meet fundamental fiduciary
responsibility.
It is worth noting that the targeted approach to divestment
is uniquely structured to contain clear sunset provisions so
that when genocide in Darfur ends, so too, does the basis for
divestment.
Let me emphasize that the dynamic interplay of divestment
and engagement we believe can and will continue to achieve
positive results without compromising the fiduciary
responsibilities of money managers.
Calvert is under no illusion that divestment alone can end
the killing and suffering in Darfur. But as apparent diplomatic
progress is finally being made toward deployment of that hybrid
peacekeeping force, now is the time to reinforce--not to
diminish--the pressure on Khartoum, especially given the
Sudanese Government's record of backtracking that Secretary
Frazer acknowledges.
In conclusion, targeted divestment, in our view, is a well-
crafted, well-timed tool that combines economic with political
pressure. It enables citizens and governments at the Federal,
State, and local level, together with corporations and their
investors, to make a vital and concrete difference. Moreover,
it is the right of investors to ensure that their investments
do not support continuing genocide and do support peace and
security in Sudan.
Investment decisions matter, and what matters most now is
bringing the conflict and abuses to an end by using all of the
tools at our disposal to save the people of Darfur.
Thank you again for the chance to testify.
Senator Brown. Thank you, Mr. Freeman.
Mr. Prendergast.
STATEMENT OF JOHN PRENDERGAST, CO-CHAIR, ENOUGH PROJECT
Mr. Prendergast. Thanks, Chairman Brown, for the
opportunity to figure out or to help figure out what ought to
be one of the most urgent questions of our time: How do we stop
the genocide? I would like to enter my written statement in the
record and divert a bit.
State and Treasury today argued that more pressure at this
time will upset the diplomatic process that is ongoing--
``delicate,'' in their word--and, in fact, upset the
international coalition, meaning China. As a former Government
official--I also worked with Bennett in the last
administration--I understand the imperative of carrying the
water of a certain policy up here to the Hill to testify. But
this set of testimonies we heard on the previous panel I think
flies in the face of 18 years of empirical evidence in Sudan
during the life of this regime, the Bashir regime, which
demonstrates that the only way to move the Khartoum regime--the
only way--and to move the rebels, I might add, is there not
just pressure, because that word has been used and bandied
about all day today, but escalating pressure. And I think the
U.S. Congress has to lead that pressure because the executive
branch is not willing to do so for a host of reasons.
These executive branch testimonies we heard also ignore the
fact that China has moved its policy in very constructive ways
over the last few months, precisely because an international
pressure campaign has targeted China's complicity in the
genocide. The worst thing we could do now is to let up, because
the deadly mistake that has been made for Darfur repeatedly
during the last 4\1/2\ years is to do precisely as the
administration proposes now--to reduce pressure, to let up.
That would ensure the same results we have had over the last
4\1/2\ years. If Congress backs off now, then we go back to the
status quo, guaranteed. History will show.
And I can tell you as a former diplomat also that one of
the most effective tools that one can have as an executive
branch diplomat working on a peace process is to have the
legislative branch behind you threatening and implementing
serious measures like the one represented in this divestment
bill. These measures provide leverage for our negotiators in
Tripoli and our efforts to try to get that hybrid force on the
ground ASAP. And they concentrate the minds of those at the
negotiating table and those around the negotiating table like
those officials coming and visiting from Beijing. It sends the
message that gone are the days that there will be no
consequences, as Senator Menenedez was saying in his opening
remarks, no consequences for committing genocide and crimes
against humanity. That indeed will have an impact.
Finally, a 1-minute history lesson. Four times in 18 years,
we have managed to be able to change the policies of the
Government of Sudan. Conveniently, a bipartisan lesson, twice
during the Bush administration, twice during the Clinton
administration.
First case, terrorism. As Senator Brownback said at the
very beginning of his statement, Osama bin Laden lived in
Sudan. They were a major state sponsor of terror in the 1990's,
and because of specific multilateral pressures, escalating
pressures against the Government of Sudan, they ended their
association with these terrorist groups and cut the ties.
Second case, slave raiding. We all remember in the 1990's
the horrific stories of the resumption of the slave trade in
Sudan. It was because of additional sanctions and additional
pressures, particularly through the United Nations Security
Council, that the Sudan Government changed its policies,
stopped aiding the militias that were attacking those
communities, and the slave raiding ended.
The Bush administration cases are just as compelling. Two
years ago, the Bush administration helped lead an international
effort to negotiate a deal between the Government of Sudan and
another set of rebels in Southern Sudan, as you all know, a war
that led to 2 million deaths. And that was a very interesting
case because that was part--the pressure was coming primarily
from Congress. You passed the Sudan Peace Act. You passed some
of the most specific legislation that said it was very clear
that if we do not see an end to this war, we are going to get
on the side of the rebels. That was a dramatic statement, in
effect, that went right to Khartoum. And they understood it,
and they made the deal. That is where Congress can really
provide leverage to a peace process.
And, finally, the final case, which is the most amazing
one, and I think that Senator Casey did a great job pointing
out the inconsistency of the testimonies, is the hybrid itself,
this AU/UN force that finally the Government of Sudan has
accepted to go into Sudan, after years of opposing any kind of
U.N. involvement, was because China began to pressure,
quietly--they are not going to get on a soapbox and condemn the
genocide. They are going to work behind the scenes--as they
did, because of this international campaign, led in part by the
divestment movement.
It is stunning that they do not see this as a positive. I
guess they just have to say these things for diplomatic
reasons.
So I would say, I think the lesson is unambiguous, that we
ramp up pressure now until the objective is met, and the
objective is not met until the genocide ends.
Thank you very much.
Senator Brown. Thank you, Mr. Prendergast.
Mr. Reinsch.
STATEMENT OF WILLIAM A. REINSCH, PRESIDENT, NATIONAL FOREIGN
TRADE COUNCIL
Mr. Reinsch. Thank you, Mr. Chairman. Let me say first it
is a privilege to appear with John Prendergast. I have followed
him over the years. I read his stuff, and I think he is one of
the most thoughtful and well-informed analysts of a very
difficult problem. That does not mean I agree with him on
everything, but it is a pleasure and a privilege to be here
with him.
I am the President of the National Foreign Trade Council.
Along with our USA Engage coalition, we support multilateral
cooperation and economic, humanitarian, and diplomatic
engagement as the most effective means of advancing U.S.
foreign policy interests and American values. We also support
multilateral sanctions, and where I differ with my colleagues
here is the question of unilateral versus multilateral action.
There is no question that the situation in Sudan is tragic,
or that the United States and the international community must
do much more to help. We are all horrified by the tragedy that
has unfolded in Darfur that has been well elaborated on by the
witnesses. And we certainly respect the motivation of those who
want to do something about it. But the challenge for Congress
and the administration is to pursue appropriate means that will
actually effect change.
We believe unilateral sanctions are rarely effective in
achieving U.S. foreign policy goals. The Peterson Institute for
International Economics has concluded that unilateral U.S.
sanctions in place from 1970 through 2000 were effective only
19 percent of the time. Sanctions also provide a good excuse
for the targeted government to blame its failures on outside
pressures and to rally nationalist support for the regime.
Additional complications arise when the United States attempts
to impose sanctions extraterritorially on companies established
in other countries, particularly our allies. Those countries
generally oppose such attempts and have enacted blocking
statutes and other measures to counteract them, as has happened
in the EU and Canada and Mexico and Norway and elsewhere. It
also makes their cooperation with us on a multilateral approach
much less likely.
Foreign policy measures by States and local governments are
even less effective and infinitely more problematic. The
Governor and legislature of Texas, Illinois, or California are
not the competent bodies to implement U.S. foreign policy, and
their narrow divestment or procurement sanctions are unlikely
to change the behavior of the target country. In addition, it
baffles me why Members of Congress would want to take foreign
policy out of their hand and out of the President's hands and
subcontract it to local governments.
Sanctions by individual States also interfere with the
President's ability to conduct foreign policy and impose
enormous compliance difficulties for companies, as each State
and local law is inevitably different from the others, creating
as many as 50 different foreign policies, each with different
rules and different lists of sanctioned companies. State
measures also impose compliance costs on businesses. A company
could be on a divestment list in New Jersey but not in
California, which will put mutual funds in an impossible
position, being told to divest to comply with legal
requirements in one State but having a fiduciary duty in other
States not to do so.
In addition, there are costs to companies and investors in
having to monitor, research, and comply with the various laws,
which may differ from Federal policy, as well as having to pay
the fees they incur when they sell stocks pursuant to a
divestment requirement and then buy new ones.
In Illinois, for example, which is the State we are most
familiar with since we sued them, the combined lists of so-
called forbidden entities doing business in Sudan named 233
companies. Had it not been declared unconstitutional, the law
would have affected 581 vendors of investment products, and a
screening of Morningstar's database suggested at the time--
which was last year--that over 900 equity mutual funds owned at
least one forbidden entity.
Now, I understand that Adam's list is much smaller than
that, and if the Federal legislation that I assume is going to
pass sooner or later were confined to Adam's list, I think it
would address many of these problems. But the bills as drafted
are not, and I think that is something that the Committee ought
to consider carefully.
Neither is divestment free for retirees. In addition to
transaction costs, divestment increases the risk to
shareholders by limiting the pool of stocks and funds. One
consequence of the initial Illinois divestment law, for
example, was that many of the small, highly regulated pension
funds likely would have had to move out of international mutual
funds and into bond funds. At the time that would have cut
their annual rate of return by almost half.
Most important, we believe foreign policy sanctions enacted
by State and local governments are unconstitutional. In 2000,
in Crosby v. NFTC the Supreme Court struck down Massachusetts'
Burma sanctions on the ground that they violated the Supremacy
Clause of the Constitution. Now, I have a wonderful quote, but
it is in my statement, and I do not have time to read it.
Let me make a couple brief comments about the pending
legislation. Most of them are about the House-passed bill, H.R.
180. The Senate bill, S. 831, I think has similar deficiencies,
although the bill is not exactly the same.
First, I want to commend Adam and the Sudan Divestment Task
Force for their work in crafting principles governing their
divestment efforts. Their ideas have shaped these pieces of
legislation for the better. Unfortunately, we continue to have
problems.
First, divestment and procurement bans are likely to face
challenges at the World Trade Organization by our trading
partners, who will see their extraterritoriality as a violation
of our trade commitments.
Second, the bill fails to limit State divestment measures
and thus gives the States inappropriate leeway that interferes
with the President's ability to conduct foreign policy. Section
4(a) of H.R. 180 states that it is U.S. policy to support State
divestment for entities that appear on ``any list developed by
the State or local government for the purpose of divestment
from certain persons.'' That raises exactly the problem that I
just talked about a few minutes ago.
Third, there are parts of the bill where further
clarification is needed. For example, in Section 2, using
proprietary information to develop a public list poses serious
transparency issues, as investors and targets of the list may
not be able to access the data to determine why or how an
entity was included, or to find out how it might be removed.
The very idea of a public list is also problematic since it is
often difficult to distinguish with certainty actual business
conducted and actual dollars transferred to an investment as
opposed to press conferences held to brag about a memorandum of
understanding that, in fact, is never acted upon.
Finally, and of great importance to us, the authorization
for States to enact procurement bans in Section 9 of H.R. 180
directly contradicts the Supreme Court's decision in the Crosby
case. In that case, the Court made abundantly clear with
respect to a procurement sanction that the Supremacy Clause
protects the flexibility required for the Executive to conduct
a coherent foreign policy. Divergent State policy sanctions
constrain that, and once again I have a wonderful quote, which
I will defer to my written statement, Mr. Chairman.
Beyond these specific concerns, let me close with the
slippery slope problem. If Congress encourages States to act on
a particular foreign policy issue through this legislation, it
will surely tempt them to pass similar divestment and
procurement legislation affecting other foreign policy issues.
For example, we have seen this in your own State, Mr. Chairman,
in Ohio, which I will get to in a minute. The Sudan Divestment
Task Force has done an admirable job in attempting to establish
a targeted divestment model. They are making a good-faith
attempt to target their efforts specifically at Sudan and to
avoid divestment in other situations. Theirs is not the only
effort and genocide in Sudan is not the only cause. There are
other divestment movements gaining momentum in State
legislatures that would target companies doing business in
Iran, and other countries, including China. And the advocates
of each of those causes believe that their cause is as
important as the cause in Sudan.
What happened in Ohio, Mr. Chairman, as you probably know,
is that when your legislature took up this issue, there was an
amendment in committee to add China to the list--a list that
included Sudan and Iran. That amendment failed by two votes,
but I suspect that when the opportunity arises again, it will
be presented again, and the outcome might be different.
And this is my final point, Mr. Chairman. If the Committee,
nonetheless, decides to act favorably on these bills, it would
be better policy if it included a clear statement of policy in
the bill which would expressly limit the ability of States to
impose foreign policy sanctions. Congress should take this
opportunity to discourage divestment in any circumstances
except those specifically authorized by the Congress in the
pending bill or subsequent legislation. By doing so, Congress
would preserve the primacy of the Federal Government in making
foreign policy and help ensure uniformity in State and local
government actions.
We have had the temerity, Mr. Chairman, to provide some
language to the Committee staff on that subject, which I hope
they will consider.
I do have some other comments about alternatives, but I
think in the interest of time, I will stop, and thank you very
much for your generosity.
Senator Brown. Thank you, Mr. Reinsch.
Mr. Sterling.
STATEMENT OF ADAM STERLING, DIRECTOR, SUDAN DIVESTMENT TASK
FORCE
Mr. Sterling. Thank you, Mr. Chairman, Senator Reed. It is
an honor to testify today on behalf of the Sudan Divestment
Task Force and Genocide Intervention Network in support of H.R.
180, the Darfur Accountability and Divestment Act. As the
director of the Sudan Divestment Task Force, the organization
at the forefront of the Sudan divestment movement, I will be
addressing the importance of foreign corporate interests,
specifically oil companies, in Sudan, and how targeted
divestment has already proven successful in encouraging foreign
companies to use their enormous leverage to address the crisis
in Darfur, and how H.R. 180 will encourage and expand these
efforts.
Sudan produces over 500,000 barrels of oil per day and has
at least 6.4 billion barrels in proven reserves. In 2006, oil
provided the Sudanese Government with over $6 billion in
revenues and accounted for 90 percent of the country's revenue
from exports. The extraction of oil requires capital, reserves,
and technical expertise, and while Khartoum effectively
controls Sudan's reserves, the government relies on foreign
companies to translate those reserves into revenue. In fact,
Sudan's national oil company, Sudapet, maintains no more than
an 8-percent equity share in any of the country's producing oil
blocks, yet the government receives a majority of the revenue
generated from these oil fields.
Unfortunately, revenue from Sudan's oil has not been used
for debt relief or development. Instead, Khartoum has allocated
the majority of its revenue for military expenditures.
According to a former Sudanese finance minister interviewed by
the New York Times, over 70 percent of the government's share
of oil profits is spent on its military.
The bottom line is that Sudan's oil industry serves as a
financial lifeline to Khartoum, and the foreign companies that
support this industry have massive leverage to engage Khartoum
and contribute to a peaceful and sustainable solution in
Darfur. Targeted divestment, a policy authorized and encouraged
by H.R. 180 provides an effective tool to pressure companies to
use this leverage in an effective, sustainable manner.
If companies do fail to respond to engagement within a
given timeframe and divestment does take place, there is
evidence to show that divestment from this very small set of
companies will have an extremely minimal impact, if any, on
investment returns. I point to a historical analysis presented
to you and performed by the Sudan Divestment Task Force with
data from Bloomberg that shows that top peer replacements for
these companies--and we have a selection of the top highest
offenders in Sudan--have consistently performed better over
time.
While targeted divestment significantly minimizes any
potential harm to investment portfolios, the movement has
already proven to have a tangible impact on targeted companies.
La Mancha Resources, a Canadian mining company, and the primary
foreign player in Sudan's mineral extraction industry, recently
took extraordinary steps in response to the situation in
Darfur, even though most of its operations take place on the
other side of the country. After weeks of engagement with the
Sudan Divestment Task Force, the company publicly committed to
refraining from new investment in the country until a
peacekeeping force consistent with U.N. Security Council
Resolution 1769 has been deployed with the full compliance and
cooperation of the Sudanese Government and to increase its
funding of its humanitarian efforts in Sudan by contributing
specifically to projects in Darfur. Additionally, the company's
president recently met with Sudan's Minister of Energy and
Mining to discuss the situation in Darfur and to encourage the
government to fully comply with the implementation of the
Security Council resolution. With their substantial leverage in
the country, corporations have an extraordinary potential and
responsibility to contribute to a solution in Darfur. La Mancha
provides a perfect example to demonstrate the power of targeted
divestment to generate the pressure necessary for corporations
to recognize the urgency in Darfur and to act responsible on
this.
Since 2005, 20 States and over 50 universities have adopted
Sudan divestment policies, and something that I think will
encourage Bill, this movement has rapidly begun to spread
through Europe and abroad. In fact, in July, the European
Parliament unanimously adopted a resolution calling on European
Union members to support targeted Sudan divestment efforts,
something we are beginning to see them follow up on.
We appreciate the concerns of the administration regarding
the implications of H.R. 180 on the Government of South Sudan
and the implementation of U.N. Security Council resolution. And
upon close consideration of this bill, Assistant Secretaries
Frazer and Dibble will see that most, if not all, of their
concerns have been addressed. H.R. 180 simply ensures that
States and municipal entities move forward with divestment in a
unified and targeted fashion that is consistent with and
complimentary to Federal foreign policy. This includes the same
carve-outs and protections for South Sudan, as well as
exemptions for companies authorized by OFAC to operate in
Sudan. And perhaps most importantly, H.R. 180 ensures that
divestment policies for State and local entities all expire
under the same conditions, benchmarked to Federal actions and
statements.
In conclusion, I would just like to point out that the
administration's position has been contradictory on this issue.
In fact, in February 2007, while speaking at the University of
Denver and when asked about the growing Sudan divestment
movement, Secretary Frazer stated that, and I quote, ``I think
it's a very positive force in our republic and
internationally.'' And I would just point out that those
statements were made in the middle of a 60-day cease-fire
during the Khartoum government and the rebels in Darfur.
Thank you for the time.
Senator Brown. Thank you very much, Mr. Sterling.
Senator Reed will begin the questioning.
Senator Reed. Well, thank you very much, Mr. Chairman.
Treasurer Caprio, thank you for your testimony. You are
looking forward now and planning to move forward on this
divestiture program, and you are confident that you can make
wise judgments that will not inhibit and reduce the financial
benefit to the funds that you are managing, that you can in a
fiduciary capacity carry this out without doing anything that
would jeopardize the funds. Is that your position?
Mr. Caprio. Correct, Senator. We are following the
scrutinized list procedure, as just elaborated by other
witnesses. We have a targeted list of companies. We advised all
our money managers that we do not want any investment in any of
these companies. We have seen companies such as Rolls Royce PLC
recently pull out of the Sudan, citing humanitarian concerns.
Siemens, a multinational giant, has also done likewise.
So it is actions like what is going on in Rhode Island and
other States and other institutions that are causing these
companies that had material operations in the Sudan, that were
assisting in the government carrying out this genocide, that is
really bringing about the change that we are calling out for.
Senator Reed. Well, thank you. Again, I thank all of you
gentlemen for your testimony.
Mr. Reinsch, I just want to as sort of a fundamental point,
if Congress passes legislation that would effectively authorize
the States to conduct these programs, is that your position? Or
do you see other challenges?
Mr. Reinsch. Well, we have gotten different views from
lawyers as to whether or not congressional action doing that
would pass constitutional muster. We have not found any lawyers
that believe that it would survive the Foreign Policy Clause of
the Constitution. We have gotten different views on whether it
would--whether Congress can say it is OK to tell the States or
the city of Takoma Park it is OK to preempt us. I mean, why you
would want to do that baffles me, but we do have some lawyers
who say that if you do that, you know, the Court might respect
it. But I do not think that you can get over the hump of the
Foreign Policy Clause.
Senator Reed. Well, I think others would disagree with you,
but that is why there are lawyers. Thank you.
Mr. Reinsch. That is exactly what Senator Baucus told me 3
weeks ago on a different matter. That is why we have lawyers.
Senator Reed. But I just want it clear that one of the
impediments in your view right now is the lack of a Federal
statutory preemption or allowing the preemption by States.
Mr. Reinsch. It certainly makes things worse. One of the
things that I commented on was that the risk here is that each
State may do it differently. And as they do it differently,
they will have different lists. And from the standpoint of fund
managers, it puts them in a very difficult position. Federal
safe harbor, which is in 180 also, sort of helps because,
otherwise, you are in the awkward position of, you know, Mutual
Fund X being ordered by the State of California to divest, and
meanwhile in New Jersey it does not have, you know--has not
ordered that fund to do the same thing because they do not have
the same list, and then you have got the potential of
shareholders in New Jersey suing the fund for having divested
and lowered their return when, in fact, all this fund is doing
is complying with California law. So there is an argument for
uniformity.
If I may make one more point, though, with respect to the
comments from the General Treasurer from Rhode Island, a lot of
this has to do with how States regulate their pension funds,
and what we learned----
Senator Reed. We regulate it very well in Rhode Island.
Mr. Reinsch. Well, I am sure you do, and I am sure Mr.
Caprio does.
Senator Reed. Indeed.
Mr. Reinsch. But what we learned in the case of Illinois
was that one of the elements of good regulation for prudential
reasons, not for foreign policy reasons, is that the funds,
particularly the municipal funds, if there are any, are very
strictly regulated in where they can invest. And they are often
precluded from investing in equities directly, and so they buy
mutual funds.
Now, what that means is the way the divestment statute
works is that the pension fund then has to go to mutual funds
that it has invested in and ask the mutual fund to certify that
none of the mutual fund's investments are in these companies
that are on the list.
In the State of Illinois, where the statute was in effect
for some months before the judge threw it out, all but two of
the mutual funds that the States' were eligible to invest in in
the first place for prudential reasons declined to make that
certification. Now, in most cases it was not because they could
not; it was because they would not, because it simply was not
worthwhile for them to go through the work, and because of the
way that States statute was constructed, it was a moving
target.
What that meant for the pension funds as a practical matter
was not simply that they had to get out of Siemens, you know,
or PetroChina. It meant they had to get out of Fidelity Fund.
And the way they were regulated meant the only thing they could
get into were bond funds because there were no other mutual
funds----
Senator Reed. I do not mean to cut you off. Time is short.
But I think you have made a pretty good case for at least some
action at the Federal level, at least in my view.
A final point, Senator Brown. Mr. Prendergast, you have
made a very compelling argument that what moves this regime in
Khartoum is pressure, and there are technical constitutional
arguments about how we should proceed or should we proceed at
all. But I would suspect that as we move forward, particularly
if we can pass legislation here, that will give the
administration at least the psychological and symbolic clout to
keep the pressure on. Is that your view, too?
Mr. Prendergast. Strong view, and I think it is not just
moving the administration that is crucial. As the Assistant
Secretaries stated, we need a multilateral pressure. And what
is fascinating about what divestment does, it gives you a two-
fer. It helps U.S. policy. It gives the U.S. leverage. But it
also puts additional pressure on China. And as they prepared
for the Olympics in 2008, as they hire people like Steven
Spielberg to present a new face to the world, it really matters
to them that they do not have this noose around their neck
called Darfur hounding this effort to present this new face.
So it cannot be overstated that while the U.S. Executive
branch continues to engage the Chinese quietly and privately,
to have the legislative branch and the disadvantage movement
hammering away at what the Chinese are doing is a profoundly
important consequence to how effective the peace process and
the effort to deploy the hybrid force will be.
Senator Reed. Thank you very much.
Senator Casey. Thank you. We have about 8 minutes before
the vote, so I will be a little bit late, but I am going to ask
a question, and then I would like Mr. Prendergast, Mr.
Sterling, and Mr. Freeman, all three to weigh in. Please try to
keep it to 2 minutes, if you can. I hate to cut it short like
this. Mr. Prendergast, really in follow-up, why don't you
answer first, and then Mr. Sterling and Mr. Freeman.
On especially your comments about ramping up pressure, in
recent months there has been a great deal of talk from the
administration about a Plan B if the Khartoum regime continues
to stonewall U.N. efforts. Talk to me about what Plan B should
be, especially in light of the Olympics. Even a paper as
conservative on China as the Washington Post, their editor
wrote an op-ed piece yesterday saying we should make the
Chinese choose between the Olympics and democracy in Burma--an
extraordinary thing for that paper to say, which has sort of
been an apologist for Chinese human rights behavior, in my
view, in the last decade.
If you would comment rolling China into each of those, into
that question, if you would, but what you think Plan B should
look like, Mr. Prendergast, and then Mr. Freeman and Mr.
Sterling. And sorry to truncate it like that.
Mr. Prendergast. That is a very good question. I think
first of all, the administration at this hearing overstated the
impact of their unilateral sanctions that the President
authorized a few months ago. We need to be acting
multilaterally. There needs to be a very clear cost to either
the government or rebel officials if they obstruct the
deployment of this hybrid or if they undermine this peace
process. And anyone who does it ought to be sanctioned, but not
unilaterally, because the Sudanese Government has basically
discounted our unilateral actions. But we need to work
multilaterally with China, France, the U.K., in the United
Nations Security Council.
We have four-fifths of the permanent five of the Security
Council now who are unified in wanting a solution to Darfur.
That is unprecedented. Russia is selling arms--they will
acquiesce if four-fifths pressure them to do something. So I do
not look at them as a strategic partner. But we can work very,
very closely.
So Plan B, what gives leverage to the talks and getting
hybrid out is working through the United Nations Security
Council with China to push Khartoum to do these things. And the
most effective way--and I cannot reiterate it enough--is
through these continuing and ramping-up efforts all over the
world, but led by the divestment movement in the United States
against Chinese commercial complicity in the genocide. And this
bill frees the thousand points of light that care about this
issue in the United States and around the world, to continue to
ramp up that economic pressure on China. And it is a
fundamentally important tool in getting the Chinese to remain
on board with us going forward to get that hybrid force
deployed and to get these peace talks concluded in the real
peace deal.
Senator Casey. Thank you.
Mr. Freeman.
Mr. Freeman. Thank you, Senator. I cannot support more
strongly the view of my friend and former Clinton
administration colleague John Prendergast in underscoring the
critical importance of the pressure that the current divestment
movement exerts not just on the Government of Sudan directly,
but indirectly, but ultimately perhaps more powerfully by
exerting pressure on the Government of China. This is so
timely, and given the Olympics approaching, this is perhaps the
most significant leverage that we have.
I would, though, make a quick broader point, and that is,
as Chinese oil companies have expanded their presence, not just
in Sudan but throughout Sub-Saharan Africa, particularly in the
Gulf of Guinea region, there has been tremendous scrutiny of
their lack of commitment to clear international human rights
standards. And we believe at Calvert that while the primary
focus and benefit, of course, of the current disadvantage
movement should be to help end the crisis and killing in
Darfur, that this movement might at the same time make a
longer-term contribution to helping the Chinese Government and
oil companies modify their policies and practices in ways that
would be consistent with international human rights
responsibilities.
So it is a two-fer, to pick up John's phrase, in terms of
the real long-term as well as the short-term benefit here on
the table.
Senator Casey. Thank you.
Mr. Sterling.
Mr. Sterling. Yes, I agree with the preceding comments and
would just add that the Plan B sanctions targeted Sudanese
companies, private Sudanese companies with little to no global
market exposure. So we would encourage focus on foreign
companies that are actually bringing revenue into Sudan and do
have a global market exposure, which is exactly what H.R. 180
does.
Senator Casey. Thank you. Thanks to all of you. We all know
what Secretary Powell said 3 years ago, that only action not
words can win the race against death in Darfur. We appreciate
the actions of Mr. Caprio's State, almost two dozen States
around the country, and the actions they have taken. This
legislation we will move in this Committee, I hope soon, and
move it on the floor, and get it enacted into law. And thank
you very, very, very much for the work you are doing.
The Committee is adjourned. Thanks.
[Whereupon, at 11:58 a.m., the hearing was adjourned.]
[Prepared statements supplied for the record follow:]
PREPARED STATEMENT OF SENATOR JACK REED
Good morning. I want to thank Chairman Dodd and Ranking Member
Shelby for having this important hearing and welcome our witnesses.
In 1966, after only a decade of peace, civil war began between the
North and Southern Sudan and continues to this day, making it the
longest running civil war in Africa. In the past twenty years, more
than 2 million people have died in Southern Sudan because of the war
and famine, and millions have been displaced from their homes.
It is a tragedy that has gone on far too long and it is time for
the United States and the world to focus on the situation. I believe
that this nation needs to work with the international community in
considering all options--diplomatic, economic and even military, to
stop the violence and suffering in the Sudan.
Because the United States government has been slow to act, state
governments have chosen to take matters into their own hands. Nineteen
states, including my state of Rhode Island, have enacted or proposed
legislation addressing the divestment of state funds and other
investment from Sudan. We will shortly hear from Senators Durbin and
Brownback who have introduced legislation authorizing states to adopt
such measures prohibiting the investment of state assets in the
government of Sudan or in any company with a qualifying business
relationship with the government of Sudan. I am proud to be a cosponsor
of this legislation and I look forward to working with my colleagues in
moving this legislation, and other legislation forward.
Citizens are also taking action. Shareholder resolutions play an
important role in addressing critical issues for investors. Consider
the issue of Apartheid in South Africa. Throughout the 80's,
resolutions were filed with well over 150 companies by investors such
as TIAA-CREF, the pension funds of the State of New York and City of
New York, and scores of religious investors. The resolutions and public
debate, coupled with the divesting of stock by many universities,
pension funds, foundations and religious groups, built considerable
pressure on companies, which began to withdraw from South Africa as
long as Apartheid was in effect. Over 150 U.S. companies pulled up
stakes and left South Africa; and the companies that stayed began to
lobby strongly for changes in the system.
Last year, a shareholder filed a resolution at Berkshire Hathaway
that would have required the company to divest from PetroChina, one of
the corporate supporters of the Khartoum regime. As a result, investors
engaged management of Berkshire Hathaway in an important discussion
about the merits of Sudan divestment during the company's annual
meeting in May of 2007. The Sudan divestment resolution filed at
Berkshire Hathaway helped to highlight the issue by raising investor,
corporate and public awareness. Though the resolution garnered only 3
percent support, Berkshire Hathaway over the months started unloading
the Chinese oil company stock.
The SEC is at a critical juncture right now with its proposed rule
on shareholder access to the proxy. Some of the pending proposals in
the rules proposed by the SEC could seriously undermine the ability of
investors to ask companies to take action on critical matters. I know
that Chairman Cox is working towards addressing some of the
uncertainties with proxy access and I hope that the end result will
ensure investors access and not diminish them in any way.
Like the war in Iraq, public opinion is well ahead of Congress
regarding the crisis in Darfur. We need to catch up. I believe this
hearing is a critical step in moving forward and I look forward to the
testimony. Thank you.
______
PREPARED STATEMENT OF SENATOR SHERROD BROWN
Good morning. Thank you all for coming here to participate in this
important hearing to examine the role of divestment and other tools
aimed at stopping the genocide in Darfur, Sudan.
During the past 20 years, Sudan has suffered from a civil war
resulting in the death or displacement of millions, regional and ethnic
strife, and, since 2003, in Darfur, 2 million Darfurians have been
displaced and as many as 450,000 have perished, at the hands of their
own government. In response to this atrocity, we here in the U.S. have
taken both economic and political action. We put sanctions in place
initially in 1997, and then subsequently strengthened them several
times. We encouraged the UN to implement an arms embargo in Darfur. We
have worked with the UN and the African Union (AU) to negotiate a peace
agreement last year. While I applaud these efforts, all of these
actions have not yielded the desired result--that is, an end to the
genocide in Darfur.
Since the peace deal was signed last year, the situation has
actually gotten worse. Just last weekend, AU peacekeepers were the
victims of a violent raid by rebel forces, which left at least 10
peacekeepers dead, several severely injured, and scores still missing.
News reports indicate that as many as 1,000 soldiers took part in an
attack on an AU base, and were equipped with armored vehicles and
advanced weaponry, suggesting they are much more sophisticated than
anyone ever expected. This violent attack now jeopardizes the
implementation of the agreement to bring in a larger UN-AU hybrid force
in the coming months. It is clear that the current strategy is not
working. ``Only action, not words, can win the race against death in
Darfur.'' Action. Not words. Secretary Powell uttered that statement
back in 2004. And here we are in the same situation three years later.
To that end, I commend the efforts of groups like those here today
to allow states to have the option of being engaged global actors and
divest their assets from companies that enable the regime in Khartoum
to sustain itself. I thank Senators Durbin, Dodd, and Brownback for
their leadership in addressing these issues in the Senate. And I
commend and my former colleagues in the House, who overwhelmingly
passed a bill that: authorizes states to divest from unethical
companies doing business with Sudan; empowers the American public with
information on these companies so they can make their own investment
decisions; and prohibits federal tax dollars from being used to procure
services from companies that do business in Sudan. This stands as a
bellwether for how we as Americans take action in a globalized world,
where companies and economies are closely interconnected. This concept
of targeted divestment of firms--from any country--that are willing to
do business with the government of Sudan is quite compelling.
Right now, around 20 states are pursuing initiatives that would
divest public pension funds from companies that are willing to work
with perpetrators of genocide, and I commend them for their initiative.
I certainly do not believe it is the prerogative of this Congress in
Washington, D.C. to tell teachers, healthcare workers, and municipal
employees in places like Parma Heights or Columbus, Ohio, where they
should be investing their precious retirement funds. I hope my
colleagues here in the Senate follow the lead of the folks in the House
and move quickly to allow states to decide for themselves what is in
their own best interests. Thank you.
______
PREPARED STATEMENT OF RICHARD J. DURBIN
U.S. Senator From the State of Illinois
October 3, 2007
Introduction
Mr. Chairman, I thank the Banking Committee for holding this
hearing today on a crisis that has gone on far too long, on a crisis
that simply must not go on any longer. The people of Sudan have
suffered drought, famine, genocide, and now utter chaos. The United
States has talked for years about putting a stop to it. Yet the crisis
continues. We must act, and we must act now.
It was over two years ago when President Bush rightly called what
was happening in Sudan by its proper name: genocide. Yet the United
States and our allies have not done enough to help stop it, and Sudan
continues to disintegrate.
The origins of the October peace conference
At the end of this month, however, there is another chance. We have
another chance to bring all of the warring factions together to agree
on a framework for peace in Sudan, a peace that the United Nations
peacekeeping force can then help secure. The United States should do
everything we can to see that this peace is agreed to, and then work
with the global community to ensure that this peace is preserved.
The latest push for peace gained momentum in late July, when the UN
Security Council voted to implement a significantly increased United
Nations/African Union peacekeeping force.
This peacekeeping force is desperately needed. The United States
should work with the UN and the global community to make sure it is
implemented as soon as possible. We in the Senate should do our part by
ensuring that adequate funds are available to help pay for this
critical mission.
But the peacekeepers are only one important step. Sudan first must
have a peace to keep, and that requires a long term political agreement
among its many factions. That is why peace negotiations are so
critical.
UN Secretary General Ban Ki-moon told me in July what he has often
said, that ending the violence in Darfur is one of his top priorities.
In early September his efforts resulted in the announcement of formal
peace talks to begin later this month between the various factions and
the Sudanese government.
These negotiations will be a critical step and deserve our
strongest support.
Keeping up the pressure by threatening legislation
What else can we in the Senate do to help? What can we do to
reinforce to the Sudanese that we are watching very closely and we
expect all parties to work towards peace? We can prepare legislation
that would increase economic pressure on the Sudanese, and be prepared
to pass that legislation at any time that the Sudanese might falter on
the path to peace.
That is why today's hearing is so critical. Our colleagues in the
House have done their part: they passed the Darfur Accountability and
Divestment Act 418-1 in July. Today the Senate considers its role.
Today this panel will explore legislative options that promise economic
penalties against those that do not in good faith pursue peace through
dialogue. In the next couple of weeks we hope to create the best
legislation we can and move that bill through committee and onto the
Senate calendar. The Senate will make it very clear to the Sudanese
that we are serious and that a bill is ready to pass if they fail.
What should this bill contain? Concerned members of the House and
the Senate, as well as the activists who've kept this crisis at the
forefront of our minds, have suggested several means by which economic
pressure could be applied, including the following:
Require the Administration to create a list of companies
supporting the Sudanese regime.
Require companies supporting the regime to report to the
SEC so that the SEC can publish a list of these organizations.
Require the Administration to report on the impact thus
far of current economic sanctions.
Prohibit federal government contracts from being awarded
to companies supporting the regime.
Authorize state and local contract prohibitions for
companies supporting the regime.
Authorize state and local governments to divest from
companies supporting the regime.
Provide investor safe harbors for divestment.
Authorize additional funding for the Office of Foreign
Assets Control within the Treasury Department, so that it can do more
to find and punish sanctions violators.
Study how the federal employee Thrift Savings Plan could
create a Terror-Free Investment Fund which would bar Sudan-supporting
companies.
And finally, increase civil and criminal penalties for
sanctions violators, which was a proposal that I included in my Sudan
Disclosure and Divestment Act and which passed the House yesterday as a
standalone measure. I'm happy to say that this method of increasing
economic pressure is already on its way to the President for his
signature.
My objective in testifying today is not to advocate for a specific
set of pressure points, even though I have introduced two bills with
Senator Brownback and many others that would increase the economic
pressure on the Sudanese regime. I think we should explore all of these
suggestions. My objective here is to provide my full support for the
Committee's plan to create the best legislation we can to put maximum
pressure on all the factions in Sudan to agree on peace. I look forward
to working with my colleagues in the Senate--as well as with the House,
the advocacy groups, and the Administration--to create the best bill
that we can and one that we can all support.
Conclusion
Whatever economic pressure we apply, the purpose needs to be clear:
the U.S. wants to help bring peace to the region. And we need to apply
this pressure with one voice. This chamber, this Congress, and this
country will not stand by and watch as chaos and destruction destroy
the people of the Sudan. There is a very real opportunity for the peace
talks to progress. We urge the Sudanese Government and all other
parties to bring a halt to the human suffering and participate fully in
the upcoming peace talks. And we will be ready to enact tough new laws,
if necessary, to further isolate the country economically if this
opportunity comes and goes, with no real change.
Thank you again for holding this hearing, and I look forward to
working with the Committee to do our part in bringing peace to the
people of Sudan.
______
PREPARED STATEMENT OF SAM BROWNBACK
U.S. Senator From the State of Kansas
October 3, 2007
Since 2003, the government of Sudan has waged a genocidal campaign
against the people of Darfur. This is the government's second genocide
in the last two decades, and the situation worsens each day with
innocent men, women, and children being slaughtered by government-
sponsored militia groups. In just four years, over 400,000 Darfurian
civilians have perished. Moreover, attacks on humanitarian workers in
Darfur rose 150 percent from June 2006 to June 2007. Dozens of these
workers were kidnapped, assaulted, and raped; their aid convoys
ambushed and hijacked. While rebel groups have also been behind many of
these attacks, the primary instigator and facilitator of this genocide
is the government of Sudan.
Over the last four years the unmatched compassion of the American
people has kept this issue at the forefront of the national conscience.
The United States has taken the lead internationally in both declaring
the atrocities in Darfur a genocide and pressuring the government of
Sudan to end the violence. Earlier this year, President Bush
implemented additional sanctions as a way of increasing that pressure
despite slow diplomatic progress. I, and many of my colleagues,
applauded those sanctions as sending a strong signal that the U.S. will
pursue even unilateral measures as a way to create pressure to end the
violence. Of course, we all agree that the best way to confront this
tragedy is through tough multilateral diplomacy, but we cannot remain
captive to the slow timetable of the Bashir regime and allied countries
that prolong the suffering through self-interest and indifference. At
the same time, the Administration, Congress, and all of us can do more.
This year the Sudanese economy will likely grow 13%, much of which
as a result of Chinese, Malaysian, and other foreign corporate
investment into Sudan's extractive resource and power sectors. Despite
U.S. sanctions preventing American companies from investing in Sudan
and punitive measures targeting Sudanese companies, foreign oil
investment continues. Such investment provides the means for the regime
to carry out its campaign of terror. In short, continued economic
growth has allowed the regime to act with impunity in Darfur. We must
intensify the effort to change the economic calculations of the
Khartoum regime.
As the Administration continues the tough work of pushing
multilateral diplomacy in the United Nations and through the efforts of
Special Envoy Natsios, the rest of us must not hesitate to adopt
legitimate measures that could have an impact on shortening the
genocide and saving lives. One such measure is targeted divestment.
The principle of divestment is simple--that none of our money and
the U.S. Government's money should be invested in the culpable foreign
companies that are helping to fuel the genocide. The essence of this
approach is that while we have taken the pledge to the people of Darfur
of ``not on our watch,'' we must also take the pledge of ``not on our
dime.'' Since the start of a national divestment campaign, States
across the country have taken action to ensure that their pension fund
dollars are not invested in such companies. I am proud that the State I
represent--Kansas--is among the States that have already passed
legislation to restrict its Sudan investments.
We are already seeing results. Since the targeted Sudan divestment
movement began, several companies from the UK to Germany to India have
suspended or significantly altered their operations in Sudan. And there
is good reason to believe the Government of Sudan has noticed and is
nervous. Clearly, by increasing pressure on foreign companies through
divestment, the United States can start to change the economic
calculations of the Sudanese regime.
Now that the American people and their representatives in State
governments have begun to act, it is time for the United States
Government to do its part. One of the key ways for the federal
government to help is to explicitly provide authorization for States
and local governments to divest from Sudan. Doing so would address an
objection that has attenuated the success of the targeted divestment
movement and has seen State divestment statutes stuck down in federal
courts. Moreover, doing so at the legislative level could help rally
the countless individuals--both young and old, from all walks of life,
and from around the world--who have engaged in remarkable acts of
individual courage in standing up against the genocide in Darfur. As
with Apartheid in South Africa, my hope is that these will all add to a
collective force that will finally bring about change in Darfur.
Earlier this year, I had the opportunity to testify before the
House Financial Services Committee in support of the Darfur
Accountability and Divestment Act, one bill among several before this
committee that have been drafted to allow Congress to grant a
divestment authorization while still retaining its Constitutional power
to regulate foreign commerce. While I understand the Executive branch
objects a priori to the granting of any divestment authority, I urge
Administration officials reconsider their position. The legislation is
Constitutional and moral; practical and powerful; limited yet
effective.
As members of Congress, we have worked to ensure that the United
States remains at the forefront of this fight. It is time again for the
United States to show leadership on Darfur. We have a responsibility to
ensure that genocide does not continue on our watch or on our dime.
______
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