Politics

Sudan Squeeze

Disinvestment remains a powerful human-rights weapon--as long as it's done carefully.
by | September 2006

Washington and the United Nations continue to ponder their options in response to the genocidal killings and ethnic cleansing in Darfur, the westernmost region of Sudan. But many state and local officials are already taking action. Their pension funds are selling billions of dollars' worth of shares in companies that do business with the Sudanese government.

It's the biggest divestment campaign since the protests over apartheid in South Africa some 20 years ago. "Having U.S. companies divest from Sudan will play a major role, because at the end of the day, money talks," says Kansas state Senator Donald Betts, who intends to introduce a divestment bill during next year's session. Seven states have passed bills or nonbinding resolutions, and legislation is pending in at least an equal number. In April, Providence, Rhode Island, became the first city to approve a divestment ordinance. But policy makers must take care that in crafting their proposals they don't harm innocent people--whether they are residents of Darfur or recipients of their own governments' pensions.

One of those who urges a cautious approach is Daniel Millenson, a student at Brandeis University who runs the Sudan Divestment Task Force, which has written model legislation that's been introduced in several states. Millenson is convinced that divestment can help bring about important social change, as it did in South Africa. But he also warns about potential pitfalls. South Africa still is having trouble attracting investment from foreign interests that staged a blanket withdrawal in the closing days of apartheid in the 1980s. Some have made no effort to return. The Sudan task force favors a more targeted approach, asking governments to divest holdings only in companies that contribute to the violence by selling military equipment or contributing revenue directly to the Sudanese government.

Illinois, the first state to pass a divestment bill last year, didn't follow that strategy. It adopted broad language directing its pension funds to sell shares in any company that has a "relationship" in Sudan. It also enacted Darfur-related disclosure requirements that have had the side effect of making it trickier for state funds to invest in private equity--easily their most lucrative investment option over the past year. "The legislature's overriding concern was for the human suffering in Sudan," says Eva Goltermann, a spokesperson for the Illinois Teachers' Retirement System, "and not the pension fund's fiduciary responsibility."

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