SRI ALERT: SUDAN
July 31, 2001

The Need for a Strong and Effective Sudan Peace Act

The war in Sudan is the longest running uninterrupted civil war to date. The extreme Islamic fundamentalist Government of Sudan is engaged in a policy of religious persecution and genocide that targets Christians and animists, thereby making innocent civilians the primary victims of this war. The genocidal atrocities that are being committed upon innocent civilians and the shear number of victims — over 2 million dead and 4 million forced to flee their homes — has caused government officials and numerous human rights organizations and activists to demand that the U.S. take the lead in an effort to achieve a just and lasting peace in Sudan and to work to pressure the Khartoum regime to halt its genocidal campaign.

In effort to make Sudan a top human rights priority for U.S. policy makers, a bill called the Sudan Peace Act (H.R.2052) was introduced in the U.S. House of Representatives. In short, the House version of the Sudan Peace Act finds that the Government of Sudan is committing genocide, urges the Bush Administration to grant $10 million dollars in previously appropriated funds to the National Democratic Alliance (NDA) to help develop a democratic civil society in autonomous regions outside of the Sudanese government's control; requires the Bush Administration to plan for the distribution of food aid outside of the U.N.'s Operation Lifeline Sudan (OLS) to ensure that the government will not have the ability to further manipulate U.S. humanitarian aid away from those most in need and to take measures to seek an end to the war; to investigate and gather evidence of war crimes; condemns aerial bombardment of civilian targets and all human rights violations committed by combatants while recognizing that the Sudanese government and its militia groups are primarily responsible; recognizes that slavery and religious persecution are government-backed; and requires that companies seeking to do business in Sudan disclose and report on the nature of the company's activities and relationship to persecution and other human rights violations in Sudan.

In addition, the Bachus Amendment (H.AMDT.77), a provision to the House version of the Sudan Peace Act offered by Rep. Spencer Bachus (R-AL), bars foreign oil companies doing business in Sudan from raising money or trading securities in U.S. capital markets given the recognition that oil production activities are fundamentally altering the war and potentially exacerbating violence. Numerous government and non-governmental reports have detailed the connection between oil and war in Sudan. The Government of Sudan is funding the war and its genocidal campaign with oil export revenues. Currently, human rights groups, congressional leaders, and other grassroots organizations and faith-based groups are mobilized in effort to get the House version of the Sudan Peace Act, and a revised Bachus Amendment passed in the Senate that would additionally prohibit parent companies and subsidiaries of foreign oil companies operating in Sudan from raising money or trading securities in U.S. capital markets.

The U.S. House of Representatives approved a strong and effective version of the Sudan Peace Act (H.R.2052) by an overwhelming vote of 422 to 2 on June 13, 2001. The House-approved version of this bill lacks only the "Brownback Amendment" (introduced in the Senate version of the Sudan Peace Act by Senator Sam Brownback (R-KS)) directing the distribution of food aid to those areas most in need ("no go" areas) that the Government of Sudan has prohibited the U.N. from entering, and a strengthened Bachus Amendment.

Prior to the House of Representatives vote supporting the Sudan Peace Act and the Bachus provision, the Securities and Exchange Commission (SEC) on May 8, 2001, opened the door for greater transparency of companies seeking to operate in rogue states (this change was spearheaded by Frank Wolf, Rep. VA (R), and Roger Robinson, William J. Casey Institute) where U.S. companies are prohibited from operating due to government imposed sanctions (including Iran, Iraq, Libya, Sudan, North Korea, Burma, and Cuba). The SEC announced that it would begin requiring foreign firms to disclose any business activities and investments in any rogue states in which U.S. companies are prohibited from operating in effort to better inform U.S. investors and alert them to the potential risks that many have previously been unaware.

The House-approved version of the Sudan Peace Act was strong and effective, particularly since it included the amendment offered by Rep. Spencer Bachus (R-AL) prohibiting foreign oil companies doing business in Sudan from raising funds in the U.S. capital markets or the trading of their stock if they are already listed on U.S. exchanges.

Unfortunately, the Senate version of the Sudan Peace Act (S.180), as passed by the Senate on July 19, 2001, is remarkably weaker than the House-approved version since, it omits any finding that the Government of Sudan is committing genocide, the condemnation of prior aerial bombardment of civilians by the Government of Sudan, the direction to the President to make available to the NDA $10 million in previously appropriated funds, disclosure requirements and capital markets sanctions language, the reporting requirement on the ability of the Government of Sudan to fund the war with oil revenue, and does not direct the State Department to investigate possible war crimes in Sudan.

The drastic watering down of the House-approved Sudan Peace Act before the Senate may be attributable to the recent clamor against disclosure requirements and capital markets sanctions (Bachus Amendment (H.AMDT.77) recently stirred up within the Bush Administration. It may be safe to surmise that those within the Administration opposed to the House-approved version of the Sudan Peace Act are fearful that capital markets sanctions and disclosure requirements for foreign oil companies and other businesses operating in Sudan would create a precedent to bar other oil companies that are complicit in human rights abuses and grave atrocities in other areas of the world from also raising money from U.S. investors, and that the result of a potential trend to impose such sanctions against these specific companies would then cause oil companies and other large commercial entities to seek their financing in Europe instead of on the New York Stock Exchange for example. Such a hypothetical scenario would then entail a future counter-effect — the threat of blocking long-term economic growth in the U.S. Basically, those opposed to the House-approved version of the Sudan Peace Act are requiring that "free markets" values triumph over U.S. security and moral interests in working to pressure the extremist Government of Sudan to seek peace and to halt genocidal atrocities and religious persecution.

The Administration's fears concerning disclosure requirements and capital markets sanctions as contained in the House-approved version of this bill are not grounded. The Bachus Amendment and disclosure requirements in the House-approved Sudan Peace Act do not contradict the principles of Capital Market Fairness. "Free markets" are based on principles of equal access, or simply that no preferential treatment is allowed. Currently, U.S. oil companies and other commercial entities are prohibited from being able to both raise money in U.S. markets and also explore for oil in Sudan. However, absent capital market sanctions, foreign oil companies or other business operating in Sudan may continue to do so in Sudan, and at the same time may also raise money from U.S. investors on the New York Stock Exchange, and be traded and owned by U.S. investors. U.S. oil companies such as Chevron have not gone to European markets because of U.S. imposed sanctions prohibiting our companies from doing business in Sudan. A similar prohibition on foreign oil companies seeking to raise money and be traded in U.S. markets would not make our markets less attractive, as evidenced by Talisman Energy's decision to sell their operations in Sudan after the House voted nearly unanimously to pass its version of the Sudan Peace Act simply because it could not risk losing access to U.S. markets.

Furthermore, other key principles of the "free markets" ideology support the imposition of disclosure requirements by companies doing business in rogue states such as Sudan. Regulatory oversight, the free flow of information, and required disclosures are all primary underpinnings of the U.S. stock markets. American free enterprise embraces the right of stockholders and lenders to ventures to establish the rules by which companies operate, thereby making proper corporate responsibility the backbone to investor confidence. Foreign companies should not get preferential treatment in U.S. markets over U.S. companies with respect to disclosure requirements and investment restrictions when entering our markets. The Bachus Amendment purports that foreign companies should be held to the same high standards that U.S. companies are required to heed, or U.S.-based companies then become disadvantaged. All companies raising money or trading in U.S. markets should be held accountable to the same rules of disclosure and corporate behavior. U.S. financial markets are the most trusted markets in the world with the highest investor confidence, in part because we have the toughest enforcement of accounting and disclosure rules, and the strictest corporate and board responsibility laws aimed at protecting investors from unprincipled corporations.

A comprehensive and effective version of the Sudan Peace Act is desperately needed by those civilians that continue to be brutally killed, religiously persecuted, selectively starved, or sold into slavery by the Khartoum regime and its military forces. The Government of Sudan is funding this war with oil revenues while innocent civilians remain the primary victims and targets. Therefore, it is essential that any version of the Sudan Peace Act include capital markets sanctions. Support for the House-approved version of this bill will not impede global competitiveness or the vitality of our capital markets. The U.S. House of Representatives, the U.S. Commission on International Religious Freedom and numerous human rights organizations have recognized the genocide in Sudan. With 2 million dead and 4 million internally displaced, the U.S. should therefore take the lead in addressing the need to halt genocidal atrocities in Sudan through a much needed, overdue and powerful response as laid out in the House-approved version of the Sudan Peace Act.

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