From mission creep to missileers asleep at the wheel.
From mission creep to missileers asleep at the wheel.
Central Europe has become an Apartheid region where Roma and non-Roma inhabit increasingly separate and decidedly unequal worlds.
Why start another body count in a Middle East conflict with no direct relationship to U.S. security?
For many the decomposition of Yugoslavia into its constituent republics in the early 1990s was anything but smooth.
When confronted by the crime of genocide, human rights activists do not typically dash to state capitols. Since 1787, foreign policy has remained outside states’ bailiwick, with Congress and the President serving as more appropriate venues for foreign policymaking. So when the United States declared the atrocities unfolding in Sudan’s vast Darfur region to constitute genocide in 2004, activists rightly responded by flooding Congressional mailboxes and crowding the Washington Mall, demanding an end to the violence.
However, as subsequent failed cease-fires and watered-down UN resolutions demonstrated, too many vital economic interests were at stake to alter Darfur’s bloody status quo. In an attempt to break the logjam, several student activists across the country began to follow the money, discovering that more than 70% of Sudan’s oil revenues is steered towards the country’s military expenditures, fueling the genocide in Darfur. Additionally, the mostly Asian oil companies operating in the country’s petroleum sector have committed human rights abuses of their own, facilitated arms transfers, and in at least one case, refueled military aircraft. Because Sudan’s foreign debt exceeds its gross domestic product, and the country possesses little capability for indigenous oil production, Khartoum lies acutely vulnerable to economic pressure. Although longstanding US sanctions mean that American companies are rarely involved with Sudan, university endowments and city/state pension funds are investing in the very firms that are underpinning the regime.
In April 2005, Harvard University became the first institution to divest from Sudan, shedding holdings in Chinese oil company PetroChina. Although a smattering of colleges and states followed Harvard’s lead, their approaches differed significantly, including anywhere from one to more than 150 companies for divestment in their sundry policies.
As a student urging my own school, Brandeis University, to divest, I sought to organize the inchoate movement, co-founding the Sudan Divestment Task Force with University of California divestment leaders Jason Miller and Adam Sterling. In the process of pushing the UC Regents to divest, Jason had developed a model of divestment known as “targeted divestment,” which surgically focuses only on companies that substantially aid the government, do not benefit civilians outside the government, have refused to take even minimal steps (such as pressuring the government to change its behavior) to ameliorate the situation in Darfur, and have proven unresponsive to shareholder engagement on the issue. The resultant 2-3 dozen “highest offending” firms turn out to be clustered in (surprise!) Sudan's problematic petroleum sector.
The targeted model stood in stark contrast to the “blanket” approach of the Apartheid South Africa divestment campaign, which included more than one-third of the S&P 500. Although effective in helping to end apartheid, the campaign’s broad sweep exacerbated a paucity of infrastructure development and foreign direct investment that disproportionately hurt the poor – not to mention crimped portfolio returns for divesting institutions. With its careful differentiation between good and bad corporate actors, the targeted divestment model quickly gained currency with both humanitarians and fiduciaries, starting with the University of California, which adopted the policy in March 2006.
Divestment’s market mechanism is as simple as supply and demand – reduce demand for a given stock and as long as supply remains constant, share price will drop. Should share price fall enough, aggrieved shareholders and shrinking executive stock options force the firm to change tack. In the case of Sudan, such a change would entail improving corporate behavior or leaving the country entirely, thus depriving Khartoum of the funds it needs to perpetrate genocide. Although schools like Harvard and the UC maintain multi-billion dollar endowments, those sizeable sums nevertheless make universities mere minnows in the ocean of institutional investing. In order to successfully dent highest offenders’ share prices, we needed to net bigger fish. We found them in the form of US city and state public employee pension funds, which, in the aggregate, total in the trillions of dollars.
Following that imperative, we began to move from college campuses to state capitols. Needless to say, the transition necessitated a new scale of organizing, as well as increased outreach to community and faith-based groups. In California, those foundations were already laid during the UC campaign. After months of hearings, votes, and nail-biting, Governor Arnold Schwarzenegger signed the nation’s first targeted divestment bill in September 2006, with the stroke of a pen, Schwarzenegger ensured that more than $400 billion worth of pension fund assets would not indirectly finance genocide. When most other state legislatures reconvened in January, a trickle of state divestment laws rapidly turned into a flood. Like Congress, constituents can call and write their state legislators to voice concerns on an issue. Unlike Congress, state legislators often respond. At present time, twenty states have divested, including the likes of Texas, New York, and Florida.
As a growing number of states have passed divestment legislation, companies previously unresponsive to more than two years of shareholder engagement suddenly perked up, anxious to move off the highest offenders list. Several major firms operating in Sudan did just that, either by changing problematic behavior or leaving the country entirely. High-profile divestment-induced departures have included Rolls Royce, previously making engines for a China National Petroleum Corporation/PetroChina oil block in South Darfur. In the words of one expert, “divestment campaigns may prove more effective than sanctions.”
Just as noteworthy, the Sudanese government has been correspondingly shrill, condemning divestment at every opportunity. Last year saw the regime place an eight-page, million-dollar ad in the New York Times to counteract the movement.
Perhaps most significant has been China’s response. By far the largest player in Sudan’s oil industry, crude-thirsty China was long content to stay mum on Darfur. However, divestment’s focus on the Sino-Sudanese arms-oil relationship has since broken China’s silence. Galled by Western outcry, China has appointed a special envoy for Darfur, sent senior officials to visit refugee camps, and nudged Sudan into accepting UN peacekeepers. Such actions stand out even more starkly considering the country’s traditional unwillingness, for obvious reasons, to criticize the human rights records of other sovereign states. Although China remains a roadblock to more robust UN action, it nevertheless appears to be taking its first, halting steps towards a more constructive approach in Darfur.
Now, in the wake of its US successes, the divestment movement is spreading to Canada and Europe. Additionally, asset managers with large holdings in highest offenders are increasingly moving into the movement’s crosshairs, with a nascent shareholder campaign pressing them to utilize their leverage and rigorously engage these firms. Companies are now more inclined to ask, “What can we do to get off your list?” than to give concerned shareholders the cold shoulder. With diplomatic and military solutions still lethally slow, divestment remains activists’ sharpest tool for changing Khartoum’s genocidal calculus.
Daniel Millenson, "Divestment: Ending the Genocide in Darfur" (Washington, DC: Foreign Policy In Focus, September 26, 2007)