The New Mexico State Investment Council is pulling investments from seven corporations doing business in Darfur. It will also ban investments by the $16 billion state permanent fund in more than a dozen others that have business relationships with the Sudanese government.
New Mexico holds about $45 million in seven companies identified by the Sudan Divestment Taskforce as the worst offenders in the ongoing civil war in the African country, which has killed more than 200,000 and displaced another two million people. Many international leaders have labeled the war genocide.
The companies are: China National Petroleum, China Petroleum & Chemical Corp. (NYSE: SNP), Lundin Petroleum (of Sweden), Weatherford Ltd. (NYSE: WFT), Wartsila (of Finland), ALSTOM (Pink Sheets: ALSGY) (of France) and Mitsui Engineering and Shipbuilding (of Japan).
Read the rest at New Mexico Business Weekly: State Investment Council divesting from Darfur
To the question…
Won’t targeted divestment hurt ordinary Sudanese citizens?
The Task Force believes strongly that economic investment in a developing country is an important tool for democratization and improved living standards. In order to avoid destroying the benefits to Sudanese citizens of positive economic investment in Sudan, the Task Force divestment model is tailored to carefully target only the most egregiously offending companies in Sudan and excludes any company that substantially benefits those outside of government circles. Companies involved in medicine, education, general consumer goods, and agriculture are specifically excluded from divestment. Since agriculture remains Sudan’s most important economic sector for most Sudanese, employing over 80% of the workforce, exclusion of the agricultural sector from divestment is especially critical to minimizing harm to innocent citizens.
Even without carefully targeted criteria that exclude companies that benefit innocent citizens, divestment is still likely to disproportionately affect the government since Khartoum already allocates little government revenue towards social spending. In contrast to the concordance of increased direct foreign investment into Sudan, improved oil revenue, and a growing military budget since 1999, there has been a gaping disparity between increased oil returns and spending on development projects. According to a UK-based Christian Aid Society report:
“Increase of [GOS] funding for the [North-South civil war, partially financed by rising, FDI-sponsored oil revenue from 1999-2001, was] not matched by an increase in funding for southern development. In August 2000, Khartoum announced that it had allocated approximately US$3 million for development in the south. This is the equivalent of one per cent of military spending. When [Taban] Deng, [the former Sudanese Minister of State for Roads turned defector], resigned, he accused the government of investing its oil wealth in the army rather than in development projects for southern areas affected by oil: ‘When I was governor I never received a single penny from the oil so I could build a school,’ he said.”
While Khartoum’s revenue disproportionately funds its military (over 70% of oil revenues go towards military spending), development programs in Sudan are largely financed by international assistance. For example, a donor conference hosted by Norway in April of 2005 generated pledges of US$1.9 billion for development assistance over the next three years. Annually, this pledge alone is 44% larger than Khartoum’s 2004 social spending. Divestment will not limit the flow of this crucial development aid to the Sudanese people.
Even with a targeted model of divestment and despite evidence that GOS revenue rarely gets funneled into important social/development projects, there is a small chance that divestment will have some impact on Sudanese citizens. However, the Task Force argues that any negative impact from divestment would be more than offset by the benefits of a change in regime behavior in response to economic pressure.
From the Sudan Divestment Taskforce site.
We’ll post more on divestment, in future posts. Do the pro’s outweigh the cons?