No oil for blood

So students, like Miller, on campuses from the University of California system to Amherst, Yale, Brown, Stanford, Harvard, Dartmouth have launched their own attack on Sudan's economic interests, successfully lobbying their universities to divest from companies they consider to be the worst actors in the Sudan, including oil and telecommunication firms. New Jersey, Maine and Oregon, along with Illinois, have done the same with their pension plans, while a dozen other states have similar legislation in the works. Earlier in April, Providence, R.I., became the first American city to divest.

The University of California system, which has 10 campuses, has estimated that it may have as much as $2.6 billion of its endowment invested in the Sudan in 70 multinational companies. In March, under pressure from thousands of students, U.C. divested from nine companies doing business there, both direct investments and monies in index funds, in a move that will impact tens of millions of dollars of those securities, making it the biggest divestment from Sudan by a university so far. The California State Teachers' Retirement System followed suit, with its board voting unanimously to create its own divestment plan. Harvard has targeted just two companies, Sinopec and PetroChina, Chinese oil firms also fingered by U.C., amounting to about $12 million in securities.

Calling their efforts a "targeted" divestment campaign, activists say that they're going after the companies that they consider the most important to the Sudanese government, and that will have the least negative impact on civilians. "We think that we can accomplish the ends of South Africa with means that have fewer side effects. We want the same results, but we don't want to hurt civilians," says Daniel Millenson, 19, a freshman at Brandeis University.

"The government of Sudan gets most of its revenues through oil revenues from international companies, so it would really hurt it if those oil companies threatened to pull out," says Seth Izen, a sophomore at Williams College, where activists have focused on pressuring the state of Massachusetts, since Williams' endowment does not hold stock in the key companies in the Sudan.

Putting pressure on Chinese companies like PetroChina and Sinopec means that those companies wouldn't have to actually withdraw from the country for the divestment to have an effect. John Prendergast, senior advisor for theInternational Crisis Group, explains: "The likelihood of the Chinese withdrawing investment in the Sudan is nil. One of the objectives of divestment would be to reduce the share price of publicly traded Chinese oil companies, raising alarm bells in Beijing, and forcing the Chinese in its own interest to go to the Sudanese government and say: 'Enough is enough.' There has to be a cost, and the cost has to be reducing their share price, reducing the value of their company, because investors would, in mass, head for the exits."

The divestment has gained steam in just over a year. "This is the largest, most successful divestment campaign since South Africa, whether you measure it in money or states or institutions or rapidity," says Miller of U.C.. By focusing on university endowments and state pension plans, the activists hope to have the greatest financial impact, while noting that individual investors who have money invested in emerging-market funds likely have money in companies that support Sudan, too.

Some of the divestment declarations from institutions are more symbolic than substantive. For instance, early this year, Amherst declared it would not have direct holdings in 19 companies doing business with Khartoum. Yet, Amherst didn't have any direct holdings in any of those companies, so the declaration amounted to giving direction to their asset managers about future holdings.

Jerry Fowler, staff director of the Committee on Conscience at the United States Holocaust Memorial Museum, sees such efforts as important for raising awareness in the U.S., as much as putting economic pressure on the Sudanese government: "It helps alert a wider audience to the issue, and the seriousness of the issue. That is its primary benefit. In terms of an actual effect on the Sudanese government itself, any effect it will have, I think, will be in the long term."

Meanwhile, some states, like Illinois, which has $117 billion in its 17 largest state pension funds, have passed legislation to divest all securities invested in the Sudan, except for those with an obvious humanitarian mission in the region, potentially impacting billions in assets. Take the four largest pension funds in the state: The Illinois Municipal Retirement Fund projects it will divest $443 million, or 2.1 percent of its portfolio; the Illinois Teachers' Retirement System projects it will divest $898 million, about 2.6 percent of its portfolio; the State University Retirement System projects it will divest $400 million, about 3 percent of its portfolio; and the State Retirement System projects it will divest $184 million or about 1.6 percent of their portfolio. The pension funds have 18 months, from late January 2006, to make the divestments. And, at least a dozen other states have pending divestment legislation, including New York, Kansas, Rhode Island and North Carolina. Some states, like Arizona and Louisiana, have voted to divest from Sudan because of terrorism, rather than genocide.

The divestments have prompted firms such as Northern Trust Bank and Barclays to start offering Sudan-free index funds, making it easier for others to get on board. KLD Research and Analytics, a socially responsible investing and research firm, maintains a list of 134 companies doing business with Sudan, updated twice a month, which money managers use to evaluate holdings. At the end of November, the firm had one client for this list. Now it has 140, and director of global sales for KLD Randy O'Neil says that interest in avoiding companies implicated in the Sudanese genocide is growing so fast he expects to see more clients "by the end of the day." Many of the companies the list identifies are in oil and gas, revenue from which the Sudanese government uses not only to finance the militias committing human rights abuses in Darfur, but also to pay the interest on its massive foreign debt. Also on the list, telecommunications companies, accused by observers like Steidle of turning off phone service before attacks begin so warnings cannot get out.

For investors, "divestment introduces a radical uncertainty," says Eric Reeves, a Smith College professor and Sudan expert. "As we see more and more states divest, the bull's-eye is going to get bigger and brighter." In the '90s, Reeves led a divestment campaign against a Canadian energy company, Talisman Energy, that did business with the Sudanese government during the country's civil war between the north and south. "The example of Talisman Energy has not been forgotten by people who manage money professionally," Reeves says. After its stock price fell, the company eventually sold off its Sudanese assets to an Indian company, and left the country.

That's just what some skeptics fear. Under pressure, one company leaves, but another that cares even less about human rights will step in. Miller, one of the key advocates for the U.C. divestment campaign, says that many of the companies they're targeting are already the worst of the worst. "The answer here is that we are targeting the worse actors," says Miller. "We're interested in knowing what each company does in the Sudan. Does that company contribute to the government, or does it contribute to building infrastructure and helping the disaffected population? We're also interested in knowing what their policies have been expressly about the Darfur genocide, and weighing all the factors, coming up with a set of companies that are the worst players -- the ones that most substantially support the government, and contribute the least to the general welfare in the country, and have zero concerns about Darfur." The hope is that the economic stick, not any moral imperative, will pressure the companies to pressure the Sudanese government.

Still, not everyone actively working to halt the genocide in Darfur is convinced that attacking the stock prices of foreign companies is an efficient approach. One reason: It's just not fast enough. "Divestment is not the best immediate strategy for stopping genocide in Darfur, Sudan, mainly because it is a long-term and indirect tactic and what we're trying to address -- genocide -- is urgent," says Ann-Louise Colgan, a spokeswoman for Africa Action, an organization that works to influence U.S. policy toward Africa, via e-mail. "There are no U.S. companies directly invested in Sudan because of existing U.S. sanctions against Khartoum, so then divestment focuses on investments in foreign companies -- or mutual funds that include foreign companies -- that are invested in Sudan, so it is less direct than it would be in other situations."

Yet the activists say that the only way to put economic pressure on the country is to take on the companies doing business there. "The U.S. is left without its biggest economic stick now," says Miller. "What are we going to do? We can't do anything more from a government standpoint on the economic side. So far, the Sudanese government has felt nada, zip, zero economic pressure. The only economic pressure it has felt is because of terrorism."

Steidle, the former Marine, says that he thinks that divestment speaks not only to the targeted companies and the Sudanese government but to Washington, too: "It sends a clear message to Washington that we're not going to stand by and allow this to happen. We're going to take whatever possible means that we the people of the country have, and that includes not allowing our money to be invested in companies that support genocide."

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