Saturday, February 16, 2008

Truth 2 Revisited

Representative Coghill in the Feb. 9th hearing on HB 287, stated that he believed that divestment is not the "right tool" to address the Darfur genocide. He shared his concern for the people of Darfur, but stated that he believes that Alaska's divestment would have no real impact on how companies do business. The facts show that the targeted divestment campaign has real teeth to it. We hope as more facts are considered by Representative Coghill and our other legislators, they will come to realize what an effective tool divestment really is.

As discussed in our Feb. 10th blog entry, the targeted divestment movement has contributed to the altered business practices of multiple companies operating in Sudan. For example, Schlumberger, which does the wire-line logging for the oil field operators in Sudan, recently undertook substantial humanitarian efforts in Darfur because of pressure from investors. Specifically, they have begun building hospitals and schools in Darfur for the local population.

La Mancha Resources, the only mining company in Sudan, has adopted a policy to develop infrastructure in Sudan. The company has developed humanitarian facilities in Sudan that reach out to populations in the country that have been marginalized by the Government of Sudan. La Mancha also now offers employment opportunities to local Sudanese and has implemented training programs for these Sudanese so that they can move up in the company.

Roberta Cohen, Senior Advisor with The Brookings Institution, had this to say in observance of the power of targeted divestment: "Rolls Royce’s withdrawal from Sudan this past year reportedly surprised the government and affected the import of needed machine parts. The Sudanese government has publicly urged an end to divestment actions, underscoring the potential sting of their impact."

The divestment campaign poses a very real threat to the Government of Sudan. Sudan has an incredible amount of external debt -- estimated at $26 billion (World Bank). Sudan owes the International Development Association (IDA) $422 million in arrears payments, and has arrears of $1.7 billion owed to the International Monetary Fund. This incredible debt has crippled Sudan's ability to secure loans. For example, the IDA refuses to consider loans to the country until the country settles its arrears. The Government of Sudan is therefore almost completely reliant on foreign direct investment to operate. Unfortunately, the government chooses to put most of the foreign direct investment (70 percent)toward the military expenditures that fund the ongoing genocide in Darfur.

Targeted divestment aims to pressure companies providing most of the foreign direct investment (the oil industry provides 90 percent) to use the leverage they have with the Government of Sudan to end the genocide. The Government of Sudan needs foreign direct investment and the companies providing foreign direct investment need shareholders. The targeted divestment campaign recognizes that the shareholders are the power base, and calls on this power base to exert its very real and very powerful influence. To deny that targeted divestment is an effective tool, is to deny the facts.