U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

50–359 2009

S. HRG. 110–933 

COMBATING GENOCIDE IN DARFUR: THE ROLE 

OF DIVESTMENT AND OTHER POLICY TOOLS 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

ON 

THE ROLE OF DIVESTMENT AND OTHER POLICY TOOLS TO COMBAT 

GENOCIDE IN DARFUR 

WEDNESDAY, OCTOBER 3, 2007 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 

dcolon on DSK2BSOYB1PROD with HEARING

(II) 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Pennsylvania 

JON TESTER, Montana 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

WAYNE ALLARD, Colorado 

MICHAEL B. ENZI, Wyoming 

CHUCK HAGEL, Nebraska 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

JOHN E. SUNUNU, New Hampshire 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

SHAWN MAHER, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director and Counsel 

JANICE M. O’CONNELL, Senior Professional Staff Member 

NEAL J. ORRINGER, Professional Staff Member 

COLIN MCGINNIS, Professional Staff Member 

SKIP FISCHER, Republican Senior Professional Staff Member 

MARK OSTERLE, Republican Counsel 

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator 

JIM CROWELL, Editor 

dcolon on DSK2BSOYB1PROD with HEARING

(III) 

C O N T E N T S 

WEDNESDAY, OCTOBER 3, 2007 

Page 

Opening statement of Senator Menendez .............................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Shelby .................................................................................................. 2 

Senator Reed ..................................................................................................... 3 

Prepared statement ................................................................................... 46 

Senator Casey ................................................................................................... 4 

Senator Martinez .............................................................................................. 4 

Senator Bunning ............................................................................................... 5 

Senator Brown 

Prepared statement ................................................................................... 46 

WITNESSES 

Richard J. Durbin, U.S. Senator from the State of Illinois .................................. 5 

Prepared statement .......................................................................................... 47 

Sam Brownback, U.S. Senator from the State of Kansas .................................... 7 

Prepared statement .......................................................................................... 49 

Jendayi E. Frazer, Assistant Secretary for African Affairs, Department of 

State ...................................................................................................................... 10 

Prepared statement .......................................................................................... 51 

Elizabeth L. Dibble, Principal Deputy Assistant Secretary for International 

Finance and Development, Department of State .............................................. 13 

Prepared statement .......................................................................................... 58 

Adam J. Szubin, Director, Office of Foreign Assets Control, Department of 

the Treasury ......................................................................................................... 15 

Prepared statement .......................................................................................... 62 

Frank Caprio, General Treasurer, State of Rhode Island .................................... 31 

Prepared statement .......................................................................................... 71 

Bennett Freeman, Senior Vice President for Social Research and Policy, Calvert Group ............................................................................................................. 33 

Prepared statement .......................................................................................... 77 

John Prendergast, Co-Chair, ENOUGH Project ................................................... 34 

Prepared statement .......................................................................................... 83 

William A. Reinsch, President, National Foreign Trade Council ........................ 36 

Prepared statement .......................................................................................... 90 

Adam Sterling, Director, Sudan Divestment Task Force ..................................... 39 

Prepared statement .......................................................................................... 94 

dcolon on DSK2BSOYB1PROD with HEARING

dcolon on DSK2BSOYB1PROD with HEARING

(1) 

COMBATING GENOCIDE IN DARFUR: THE 

ROLE OF DIVESTMENT AND OTHER POLICY 

TOOLS 

WEDNESDAY, OCTOBER 3, 2007 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 9:37 a.m., in room SD–538, Dirksen Senate Office Building, Senator Robert Menendez, presiding. 

OPENING STATEMENT OF SENATOR ROBERT MENENDEZ 

Senator MENENDEZ. This hearing of the Banking Committee will 

come to order. Let me start off by thanking Chairman Dodd and 

the Ranking Member for calling this important meeting. 

Last July, Chairman Dodd asked the Senate Majority Leader to 

expedite Senate consideration of H.R. 180, the Darfur Accountability and Divestment Act, which had just passed the House by a 

vote of 418–1. The Majority Leader agreed to do so, but apparently 

objection was raised on the Republican side of the aisle, so the bill 

remains before the Banking Committee. 

It is my understanding that the Ranking Member has expressed 

to the Chairman some interest in the legislation and requested 

that the Committee conduct a hearing on the matter, so we are appropriately here today. 

Senator Dodd asked that I chair the full Committee hearing this 

morning, and I am more than happy to do so. I believe that the 

Chairman hopes to mark up the Sudan legislation later this month 

and looks forward to working with Senator Shelby and other Members of the Committee to reach agreement on a bipartisan bill to 

recommend to the full Senate. 

Let me formally begin this hearing entitled ‘‘Combating Genocide 

in Darfur: The Role of Divestment and Other Policy Tools’’ with 

some opening remarks. We have a very full agenda and witness 

panels, so I will keep my opening statement brief and ask that it 

be considered fully in the record. 

In 1948, the United Nations adopted the Convention on the Prevention and Punishment of Genocide. In 1948, the world said, 

‘‘Never again.’’ Never again will we allow genocide to happen. 

In 1994, after the genocide in Rwanda, the world said, ‘‘Never 

again’’ again. 

In 1994, after the genocide in the Balkans, the world said, 

‘‘Never again’’ again. 

dcolon on DSK2BSOYB1PROD with HEARING

2 

In 2004, during the genocide in Darfur, the United States said, 

‘‘Never again.’’ Yet those words mean nothing unless we take real 

action to stop genocide. 

We are here today to discuss a bill which would take real action 

by taking real money out of the hands of a genocidal regime, and 

I personally am here to say that I do not believe we should delay 

even one more minute. If you were in the camps in Darfur, would 

you be content with the counsels of patience and delay? If you were 

in your home living in fear, would you be content with the counsels 

of patience and delay? If you had seen your entire family slaughtered and were hoping to escape the same fate, would you be content with the counsels of patience and delay? And, frankly, I believe that any more delay continues to put more and more people’s 

lives at risk with each passing day. 

In 2006, we were told that it is not time for new sanctions. Early 

this spring, we were told that it was not time for new sanctions. 

Now we are being told once again that now is not the time for 

tightening the economic noose. I personally could not disagree 

more. I believe now is the time. 

I am confident that one tool, the Darfur Accountability and Divestment Act, introduced by Senator Durbin and joined here by 

Senator Brownback, who both have been incredibly powerful voices 

on this issue, will force the Khartoum government to negotiate and 

put an end to chaos and genocide in Darfur. 

And, finally, I would like to point to the fact that there is ample 

precedent for this tool. Many States, cities, universities, and private pensions have taken the initiative and have enacted or are 

working toward Sudan disinvestment. Over 2 years ago, I sent a 

letter to all New Jersey Democratic State legislators encouraging 

them to approve this divestment, and I am proud to report that my 

own State of New Jersey became the second State to enact this policy. 

Since then, New Jersey has identified over $1.4 billion in funds 

to divest, and of that, $300 million has already been divested. 

There are currently commitments and discussions for divesting up 

to another $500 million. That is just one of the many success stories gaining momentum across the country. 

So I hope that we can reach the bipartisan agreement that would 

be so crucial to sending a powerful message to the Khartoum government. 

With that, I am happy to recognize the distinguished Ranking 

Member of the full Committee, Senator Shelby. 

STATEMENT OF SENATOR RICHARD C. SHELBY 

Senator SHELBY. Thank you, Mr. Chairman. 

Over the past 20 years, we have taken a series of incremental 

steps with regard to Sudan in an effort to deal with the Government of Sudan’s repeated violations of international norms. These 

measures have included restrictions or prohibitions on foreign aid 

included in annual appropriations bills as well as congressional action on the Sudan Peace Act of 2002, the Comprehensive Peace in 

Sudan Act of 2004, and the Darfur Peace and Accountability Act 

of 2006. 

dcolon on DSK2BSOYB1PROD with HEARING

3 

Now, today we are considering requiring corporate divestment 

from a desperately poor country ruled by a despotic regime. This 

is not a step that we should take lightly, but it is a step that we 

should take, and it must receive serious consideration by this Committee today. 

I commend the Chairman for scheduling this hearing and assembling the panels that will appear before us today. I also want to 

join the Chairman in welcoming our colleagues, Senators Durbin 

and Brownback here, who have more than a passing interest in 

this legislation and have pushed it forward. They were pushing it 

hard in July. I was the one that asked for the regular order. We 

are here today. Let’s get this legislation moving. 

Thank you. 

Senator MENENDEZ. Thank you, Senator. 

Senator Reed. 

STATEMENT OF SENATOR JACK REED 

Senator REED. Thank you very much, Mr. Chairman and Senator 

Shelby. This is a critical issue with respect to our response to the 

genocide in Darfur, and I want to commend particularly Senator 

Durbin and Senator Brownback for their leadership on the issue, 

which stretches over many years. Before this was a front-page 

issue, this was an issue of concern and of conscience to both these 

gentlemen. Thank you. 

I also want to recognize later in the panel our General Treasurer 

from Rhode Island, Frank Caprio, who has taken the leadership in 

Rhode Island of divesting State fund. I thank him for his appearance here today and for his leadership in Rhode Island. 

I would like my full statement made part of the record, if possible. 

Senator MENENDEZ. Without objection. 

Senator REED. And just let me make a point. One of the ways 

that we can bring pressure to bear on corporations is through the 

proxy process where shareholders can come forward, demand in the 

annual meetings that these resolutions be considered, that their 

companies that they hold shares in are responsible for the investments. 

The SEC at this moment is at a very critical juncture with its 

proposed rule on shareholder access to proxy statements. And some 

of the pending proposals and the rules suggested by the SEC could 

seriously undermine the ability of investors to ask companies to 

take actions on matters like Darfur. So I would suggest—and I 

know that Chairman Cox is working toward addressing some of 

these issues—that in a separate effort that if we inspire the SEC 

to take appropriate action so that individual shareholders can gain 

access to the proxies, can make these issues part of their deliberations, I think that will complement the legislation proposed by Senator Durbin and Senator Brownback. 

Thank you very much, Mr. Chairman. 

Senator MENENDEZ. Thank you. 

Senator Casey. 

dcolon on DSK2BSOYB1PROD with HEARING

4 

STATEMENT OF SENATOR ROBERT P. CASEY 

Senator CASEY. Mr. Chairman, thank you for being in charge of 

this hearing. I want to thank Senator Dodd for his leadership in 

making sure we got this hearing scheduled. 

I want to reiterate much of what has been said. I first of all want 

to commend our two colleagues who are here, Senator Durbin and 

Senator Brownback, for your leadership on this issue going back 

years now. We are grateful for that. And I think what brings both 

of you to this issue and what brings so many people in this room 

together today is that so many people here for many years have 

been summoned by your conscience to be here and to work so hard 

on this issue. And I am grateful for the opportunity to work with 

many in the Congress, but especially Senator Durbin working on 

his bill, Senate bill 831. 

I think it is critically important that we move forward, not have 

any more delay, as Senator Menendez said, and not more talk and 

more discussion. We need to move this legislation to give the Federal Government and to give the world a directive that we are 

going to use divestment as a tool, as it has been used in many 

other instances, at long last to use this tool to move an agenda forward. 

I was struck by—we saw the story on Monday in a lot of places, 

but there was an AP story in the Washington Post about the ten 

peacekeepers who were slaughtered in Darfur. But I just circled 

something that we have seen over and over again, but just this one 

line from the Washington Post, and I quote—and this is from Monday, October 1st: ‘‘Violence and disease have left as many as 

450,000 dead and displaced 2.5 million.’’ 

Now, we have heard these numbers over and over and over 

again, and I will tell you, anyone who comes to that table today 

and says, well, we have got to slow down, we have got to be patient 

here, we have to have another round of discussions, we have got 

to move slowly—anyone who counsels that today has a very high 

burden of proof today. And I hope that those who counsel that will 

bear in mind the human tragedy that this is. 

So I think that many of you have worked on this long before I 

got to the Senate, but I am happy to join this effort. And I am 

grateful for the opportunity to be here today. 

Thank you, Mr. Chairman. 

Senator MENENDEZ. Thank you, Senator. 

Senator Martinez. 

STATEMENT OF SENATOR MEL MARTINEZ 

Senator MARTINEZ. Thank you, Mr. Chairman. I want to add my 

words of thanks to our colleagues that are here this morning on 

this very important issue. 

I became aware of the dire situation in Darfur while I had the 

opportunity to work in the Sub-Saharan Africa Subcommittee of 

Foreign Relations with Senator Feingold, and obviously this is an 

issue that touches all of us deeply. 

I think that the approach that is being suggested here today is 

appropriate and is timely. I believe that the United States continues and ought to continue to be a moral force in the world, and 

it is not only about profits, it is also about people. And so I do bedcolon on DSK2BSOYB1PROD with HEARING

5 

lieve that it is very appropriate that in this instance we move aggressively toward creating a financial disincentive for people to do 

business with those who abuse people in such a terrible way. 

So I look forward to the testimony from the witnesses, Mr. Chairman and thank you for holding this timely hearing. 

Senator MENENDEZ. Senator Bunning. 

STATEMENT OF SENATOR JIM BUNNING 

Senator BUNNING. Thank you, Mr. Chairman. Thank you for 

scheduling the hearing on this very important topic. 

Earlier this year, there was an effort in the Senate to move a bill 

dealing with investments in the Sudan. I thought that was inappropriate because this Committee had not even had one hearing on 

the subject. 

I agree with everyone in this room that States and local governments should be able to spend their money however they see fit. 

That includes not spending money with certain companies. Certainly, individuals have that same right as well. What I do not 

agree with is the idea that each State or city should have its own 

foreign policy. 

The Framers of our Constitution wisely gave control over foreign 

policy to the Federal Government, not to each State. We must 

speak with one voice, not 50 or 100 voices, when dealing with other 

nations. Legislation to change that balance is not only a bad idea, 

but I believe it is unconstitutional. 

If States or individuals think our policy toward Sudan is not 

strong enough, there is a proper way to go about making a change. 

Just like we have done with other countries, Congress can pass a 

sanctions law prohibiting some kinds of dealings or all dealings 

with the Sudan. That is the right approach, not letting each city 

or State set its own foreign policy. 

I look forward to hearing from our witnesses about this topic. I 

especially want to hear why they believe current sanctions law is 

not adequate and what, if anything, stands in the way of States, 

cities, or individuals spending their funds however they see fit. 

Thank you again, Mr. Chairman. 

Senator MENENDEZ. Thank you, Senator. 

With that let me turn to our two colleagues, Senator Durbin and 

Senator Brownback, who have been incredibly powerful voices on 

behalf of having action taken to end the genocide in Darfur. Senator Durbin. 

STATEMENT OF RICHARD J. DURBIN, U.S. SENATOR FROM THE 

STATE OF ILLINOIS 

Senator DURBIN. Thank you very much, Mr. Chairman, and to 

Members of the Committee, this is a hearing that we have been 

waiting for, and I am so glad that you are doing it today. I thank 

you so much for taking the time to gather this morning. And I especially thank my colleague, Senator Brownback. We are often 

faulted in Washington for being too partisan. I am happy to report 

that from the beginning Senator Brownback and I have worked together on this, as so many in Congress have worked to deal with 

this. 

dcolon on DSK2BSOYB1PROD with HEARING

6 

I have my disagreements with the Bush administration. I think 

that is a matter of record. But I have said before and I will say 

again, this President’s courage in declaring a genocide in Darfur is 

exemplary. Too often in the recent past there has been a reluctance 

and reticence to speak truth to power about issues like genocide. 

I am happy that President Bush spoke out when he did. I am glad 

that his statements about that genocide were echoed by his Secretary of State Colin Powell and then later Condoleezza Rice. I 

have spoken to him personally about this. He has given speeches 

at the Holocaust Museum just a few months ago. I believe that he 

is sincere in believing we face an extraordinary, historic challenge. 

The civilized countries of the world cannot ignore the reality of the 

genocide in Darfur. And if we cannot ignore that reality, we must 

do something about it. 

I do not think we should believe that the killing and suffering 

have ended in Darfur. The genocide continues. I do not think we 

should believe that sending 20,000 or 25,000 peacekeeping forces 

from the United Nations will bring peace and stability to this region. That force is very small in comparison to a region as large 

as the State of Texas. 

Senator Casey made reference earlier to a news item this week 

which is troubling. The African Union force is a volunteer force 

that is working hard in the area, but it is really challenged by the 

size of the area and the nature of the enemy. Just this last week, 

Senegalese troops were attacked and ten were killed, and now 

there is a serious question as to whether Senegal will continue to 

contribute forces to this peacekeeping force. That is how tenuous 

this commitment is from those currently serving in Darfur. We 

should never believe that this issue has been resolved because of 

the action of the Security Council. 

And, third, we have to do what is necessary to put pressure on 

the government in Khartoum. Time and again—time and again— 

this government has come forward and said, ‘‘We are going to 

change this situation. We are going to put an end to it.’’ And they 

have failed utterly to do so. We have to accept our own personal 

responsibility here. And the question is: What is our responsibility? 

In this era of asymmetric challenges to great powers, we have to 

look to the tools that are available to put pressure for change. 

What Senator Brownback and I bring to you is one tool that could 

be used—a tool that will combine a lot of different elements and 

putting pressure on Sudan to make a change and, more importantly, pressure on Sudan to engage in a peace conference that will 

bring ultimate peace to this region. 

I do not believe the presence of peacekeeping troops will be an 

easy task so long as the militias run roughshod over these poor 

people. If we can force the government of Khartoum to move toward a real peace conference and real accommodation, then we 

might find real peace for these poor people who have suffered for 

so long. 

I will just say in brief summary here, this bill has a number of 

elements that I hope you will consider: 

Requiring the administration to create a list of companies supporting the Sudanese regime. I tried to do this in the supplemental. 

dcolon on DSK2BSOYB1PROD with HEARING

7 

Unfortunately, the administration did not respond, did not create 

the list that we asked for: 

Requiring companies supporting the regime to report to the SEC 

so that the SEC can publish the identities of these organizations. 

Requiring the administration to report on the impact thus far of 

current economic sanctions. 

Prohibit the Federal Government contracting with companies 

who support the regime. 

Authorize State and local contract prohibitions for companies 

supporting the regime. 

Authorize State and local governments to divest from companies 

supporting the regime. 

Provide investor safe harbors. 

Authorize additional funding for the Office of Foreign Assets 

Control within the Treasury Department. 

Study how the Federal employees’ Thrift Savings Plan could create a Terror-Free Investment Fund which would bar Sudan-supporting companies. 

And finally, increase civil and criminal penalties for sanctions 

violators. 

All of these things would put teeth in this effort. I have tried, 

as some of you have tried, to reach out to different groups in my 

home State urging them to divest. Interesting response. Two major 

universities, the University of Illinois and Northwestern, said, ‘‘We 

will do it. We are going to divest from any holdings that relate to 

companies like PetroChina, the largest oil company in the Sudan.’’ 

I was very heartened by that. 

Another university, which I will not name, said they were not 

going to divest, and I asked the president why, and he said, ‘‘It is 

not our policy to get involved in this kind of a fight.’’ I asked him 

a couple simple questions: ‘‘Do you believe there is a genocide in 

Sudan?’’ He said, ‘‘I really don’t know.’’ And I said, ‘‘As the president of a university, you should. The President of the United States 

believes there is, and I believe there is, and many people do.’’ 

Second, ‘‘If there is a genocide, what is your responsibility? What 

is your moral responsibility?’’ He said, ‘‘I can’t answer that question.’’ 

I was really disappointed by that reply. Perhaps there are others 

who want to take some refuge in ignorance or avoidance. We cannot afford to. The President of the United States has spoken out 

that this is a genocide in our time. Now it is our time to act. 

Thank you, Mr. Chairman. 

Senator MENENDEZ. Thank you. 

Senator Brownback. 

STATEMENT OF SAM BROWNBACK, U.S. SENATOR FROM THE 

STATE OF KANSAS 

Senator BROWNBACK. Thank you very much, Mr. Chairman and 

colleagues. I appreciate your interest and willingness to take this 

issue up. Senator Shelby and I have spoken several times about it, 

and I appreciate his interest in and support for it. 

I have been to Darfur. I have been to Sudan. Once you are there 

and you see the people suffering, it is just really hard to say, well, 

I do not think maybe we ought to do this because it might conflict 

dcolon on DSK2BSOYB1PROD with HEARING

8 

with something else. When you see it, then it is one of those things 

where you say, ‘‘I have got to do something.’’ We have got to do 

whatever we can, given the status that we have in the world. This 

is the most powerful Nation in the history of mankind. And you 

have people who have been run out of their villages by militias 

sponsored by the government put in harm’s way, dying in hundreds 

of thousands, and at the same time we will probably see the Sudanese economy grow by 13 percent this year. That is the level that 

is projected for what the Sudanese economy will do this year, growing by 13 percent. That is primarily due to investment by Chinese 

and Malaysian resource companies, primarily oil companies, some 

of which we are investing in. 

We have said often, ‘‘Never again,’’ and we have taken up the 

pledge of ‘‘Not on our watch.’’ We also need to take up the pledge 

‘‘Not on our dime,’’ and that is what we are asking for with this 

campaign and this effort. 

I have to say, I am particularly heartened by young people across 

America who have constantly been coming to my office saying, you 

know, we want to see this end, we want to do something about it. 

And a group of them camped out at my home in Topeka, led by 

Matthew Vines and other students from Wichita East High School, 

and pressed the Kansas Legislature until they enacted a divestiture campaign on the Sudan from the Kansas State pension funds. 

And I said, ‘‘God bless them for doing that.’’ This is a group of high 

school students that see it and say this is terrible and it should not 

take place and we should not be allowing it to happen and we 

should divest from it. 

The key here for this Committee to consider—and I think Senator Shelby has rightfully pointed out, in the regular order of 

things—is that we need to act as a Congress to allow this to take 

place. And that is the key point. Senator Durbin, who has been excellent on this, has been dogged and determined on this, and I applaud his efforts. Now some of these divestiture bills are being 

struck down by State and Federal courts saying that this steps into 

the purview of the Congress. 

The Congress by this act can explicitly say that the States can 

do this, and that is one of the key provisions of this bill. One of 

the key ways the Federal Government can help is to explicitly provide the authorization for States and local governments to divest 

from Sudan. Doing so would address an objection that has attenuated the success of targeted divestment movements. And so in that 

sense, then, I would hope it would get to other issues raised by my 

colleagues that we do not want to have 50 or 100 different foreign 

policies. No, this is one that is set by the U.S. Congress. It is authorized by the U.S. Congress. Now the States can move forward 

with it. And I think that is a good, regular-order way to move forward with this. It is a way to get our citizenry involved in a key 

issue of our time. And I would also hope it would do something 

that Senator Reid commented about, that it would cause individuals then to start to look at their own investments and things that 

companies are doing, companies that they are investing in, and 

saying, again, ‘‘Not on my dime.’’ We are going to try to do it as 

a Federal Government, which we have done through sanctions. We 

are going to try to do it through the States, through these targeted 

dcolon on DSK2BSOYB1PROD with HEARING

9 

divestitures that the Congress would have to allow to take place. 

And we are going to press it as individuals and with individual 

companies so that we are not allowing a genocide to take place on 

our time, on our dime. And I think that should be a simple, strong 

message. 

We are seeing some early results of this in a positive fashion. We 

have seen companies from the U.K. to Germany to India that have 

suspended or significantly altered their operations in the Sudan. I 

think there is good reason to believe that the Government of Sudan 

has noticed and is nervous somewhat about this. They are not 

going to say that, but the more we can tighten this, the less they 

are going to be able to grow that economy, the less money they are 

going to have to conduct this second genocide. 

Now, I want to remind my colleagues, this is the second genocide 

by this government that was started by Osama bin Laden. This 

government was started and put into power by Osama bin Laden. 

They have done a genocide in the South where 2 million people 

were killed over a long period of time. This government was actively involved in the Sudan Peace Agreement that was negotiated 

by one of our former colleagues, Senator Danforth. There is now 

peace in the South. People are starting to rebuild, albeit slowly. 

Now you are seeing this take place in the west. This is the second 

genocide. These guys have had plenty of warning. 

We need to act to be able to allow this to take place by State and 

local units of government, and hopefully this will also push into the 

private sector. 

With that, I would just urge my colleagues to act to allow this 

to take place. 

Senator MENENDEZ. Well, thank you both. I just have one quick 

question. What would you say to the Members of the Committee on 

the importance of getting a markup before the meeting in Tripoli? 

Senator DURBIN. I would say, Mr. Chairman, that this could be 

an excellent opportunity for real peace to come to the region, as 

Senator Brownback said, when Senator Danforth led that effort for 

peace in the South; and the sooner we move on this, even if it is 

not fully implemented, the stronger the message to Khartoum that 

we mean business and that we want to see them resolve their own 

internal difficulties. I do not believe there is anything else that we 

could do as a Congress more important. 

Senator MENENDEZ. Senator Shelby. 

Senator SHELBY. Senator Durbin, you are the deputy Democratic 

leader, the Whip. If we push this bill out of the Committee, which 

we will, I believe, soon—as soon as Senator Dodd will arrange it— 

you could get time on the floor, I am sure. 

Senator DURBIN. I am going to do my very best. I have a friend 

named Harry Reid that I will talk to personally about this. 

Senator SHELBY. We should do it. 

Senator DURBIN. He shares our feelings about this issue. 

Senator SHELBY. Thank you. 

Senator MENENDEZ. Thank you both for your testimony. We appreciate your leadership as well. 

Let me call up our second panel: Jendayi Frazer, who is the Assistant Secretary of State for African Affairs. As Assistant Secretary of State for African Affairs, Dr. Frazer plays a key role in 

dcolon on DSK2BSOYB1PROD with HEARING

10 

shaping President Bush’s foreign policy toward the Sudan. We welcome the Secretary. 

Elizabeth Dibble, who is the Principal Deputy Assistant Secretary for International Finance and Development. Serving in that 

position, Ms. Dibble oversees the State Department office tasked 

with protecting U.S. investment abroad, promoting market-based 

investment standards, and encouraging other countries to adopt 

policies that create sound investment regimes. 

And Adam Szubin, who is the Director of the Office of Foreign 

Assets Control in the Department of the Treasury. In that position, 

Mr. Szubin administers America’s sanctions policy to advance our 

Nation’s foreign policy and national security objectives. These include programs targeting state sponsors of terrorism, international 

narcotics traffickers, states active in the proliferation of weapons of 

mass destruction, and select foreign countries. 

We welcome you all to the Committee. Your full statements will 

be included in the record. We ask you to summarize them in the 

context of about 5 minutes or so, and we will start with Secretary 

Frazer. 

STATEMENT OF JENDAYI E. FRAZER, ASSISTANT SECRETARY 

FOR AFRICAN AFFAIRS, DEPARTMENT OF STATE 

Ms. FRAZER. Thank you, Mr. Chairman, Ranking Member Shelby, Members of the Committee. Thank you for the opportunity to 

testify on the administration’s Sudan policy and specifically our efforts to peacefully end the tragic humanitarian situation in Darfur. 

Sudan is a top priority for the administration. We appreciate the 

generous support of Congress as we work to resolve the situation 

in Darfur which, among many things, has helped us sustain the African Union peacekeepers in Darfur and most recently achieve 

United Nations Security Council Resolution 1769 authorizing the 

deployment of 26,000 AU/UN peacekeepers. But, as demonstrated 

by the tragic events of September 29th with the attack on a camp 

of the AU Mission in Sudan—AMIS—that resulted in the death of 

at least 10 AU peacekeepers, there is still a long way to go to 

achieve peace in Darfur. I look forward to our continued close relationship with Congress as we work together to bring peace to the 

region. 

Mr. Chairman, we are at a critical point in our efforts in Sudan. 

The large, robust peacekeeping force for Darfur that we have all 

worked for over the last few years is finally on the verge of deployment. Its first elements are slated to go in before the end of this 

year. The renewed talks that aim to achieve a lasting political solution in Darfur are expected to begin on October 27th in Libya. This 

progress, while long in coming, is due in large part to increased 

international pressure on Sudan, led by the United States. 

At the U.N. General Assembly last week, President Bush stated 

that ‘‘America has responded [to the suffering in Darfur] with 

tough sanctions against those responsible for the violence.’’ The 

new sanctions he imposed on May 29th targeted 30 Sudanese Government-owned or -controlled companies and three individuals, including two government officials and one rebel leader. These new 

sanctions, and stepped-up enforcement of existing sanctions on 

Sudan, are working. To move forward from here, we are working 

dcolon on DSK2BSOYB1PROD with HEARING

11 

closely with the United Nations and the AU to implement the 

agreements, even as we continue to closely monitor the actions of 

all parties. 

We fully appreciate the efforts of American citizens and the Congress to seek additional ways to increase pressure on Khartoum. 

We are confident that our May 29th sanctions have and are working to provide the necessary pressure. However, we are at a critical 

moment, and it is important to avoid any actions, including legislative measures, that might set back the progress we have made thus 

far. 

In considering our position, we also have to bear in mind that 

the Government of Sudan has accepted UNAMID and the need to 

negotiate a peace deal. At the moment, the main issue is whether 

rebel factions will be an obstacle to a peaceful negotiated settlement. 

We are also concerned that some initiatives to increase economic 

pressure on Sudan will damage our relationship with our European 

partners rather than increase pressure in Khartoum and may further complicate efforts to carry out our substantial assistance programs. A welcome and useful initiative at this juncture would be 

for Congress and other concerned groups to issue statements calling for the rapid deployment of the UN/AU hybrid force and calling 

on all parties to participate in the political process. 

That said, we must be prepared and the administration is willing 

to impose additional sanctions if the Government of Sudan places 

roadblocks to the deployment of UNAMID or starts a new military 

offensive carrying out attacks against innocent civilians. 

Today, I will review the present situation in Darfur, our efforts 

to achieve full implementation of the Comprehensive Peace Agreement, which ended more than 21 years of warfare between North 

and South, and what further steps are needed to realize our goals. 

Efforts to end the violence in Darfur and implement the CPA must 

go hand in hand, and we are willing to exercise pressure to achieve 

success on both fronts. At the same time, we must also be wary of 

initiatives that advance peace in one part of the country at the expense of another. 

Let me first turn to Darfur. The situation on the ground is chaotic. Tribal conflict, survival-motivated violence, governmentbacked Janjaweed attacks, clashes between rebel and government 

forces, and rebel attacks on AMIS continue. Since the beginning of 

2007, nearly 248,000 people have been newly displaced from the 

fighting. This is in addition to the over 2 million people currently 

living in camps or settlements for the displaced and the over 

235,000 refugees in neighboring Chad. On September 29th and 

30th, the 7,000-strong African Union Mission in Sudan suffered its 

greatest loss since its initial deployment in 2004. Armed men from 

rebel factions viciously attacked the African Union base camp in 

Haskanita, killing 10 peacekeepers, looting supplies and vehicles, 

and destroying the buildings. The 150 or so primarily Nigerian 

peacekeepers fought back, repulsing the first wave of attackers, but 

in the end were overpowered and forced to evacuate in the early 

morning hours. We honor the service of those peacekeepers that 

lost their lives, and our hearts go out to their families. 

dcolon on DSK2BSOYB1PROD with HEARING

12 

The tragedy of this attack highlights the urgency to deploy the 

UN’s heavy support package and the UN/AU hybrid peacekeeping 

mission—UNAMID—to Darfur as soon as possible. The United 

States has been leading this effort. We have been working with the 

United Nations to recruit the necessary troop contributors, and 

with a few exceptions, the U.N. has received an abundance of offers. We are also expanding seven of the African Union’s base 

camps to hold two additional battalions that will serve as protection for the UN’s heavy support package units. Among other units, 

the heavy support package includes engineers from China that will 

help prepare the infrastructure for larger deployments of peacekeepers early next year. We are also providing training and equipment to African battalions that will deploy as part of the U.N. mission. 

Again, the Sudanese Government has publicly accepted U.N. Security Council Resolution 1769 and has pledged cooperation with 

its deployment. We will hold them to this pledge. The key leaders 

of UNAMID are already on the ground. The UN/AU Joint Special 

Representative Adada and UN/AU Force Commander Agwai are already in place. We have warned the Government of Sudan that we 

are watching closely and that we will insist on nothing less than 

full cooperation, from flight and customs clearances for U.N. equipment, to the rapid provision of entry visas for deploying personnel. 

The heart of the solution in Darfur is an inclusive political agreement, and the United States is sustaining its efforts to achieve that 

end. There can be no military solution. I was present in Abuja, Nigeria, when the Government of Sudan and Minni Minawi, leader 

of the Sudan Liberation Movement, signed the Darfur Peace Agreement on May 5, 2006. The DPA is a fair agreement which addresses the core grievances of the people of Darfur. Unfortunately, at the 

eleventh hour, some parties became intransigent and refused to 

sign. We have all learned from that process. 

The United Nations and African Union are providing renewed 

leadership, and their efforts are making headway. The new talks 

are scheduled to begin on October 27th in Libya. The U.N. and AU 

have incorporated the regional countries into the process and are 

formulating a mechanism to fully include civil society, tribal leaders, and representatives of the internally displaced persons camp. 

Senator MENENDEZ. Madam Secretary, if I could get you to sum 

up for us. 

Ms. FRAZER. Yes, certainly. The first order of business in Libya 

should be to strengthen the cease-fire monitoring mechanism. 

But at the moment, the splintered rebel factions are creating obstacles to a peaceful negotiated settlement. Several of the rebel factions have refused to attend peace conferences, citing untenable 

conditions, and others are wary of the process. And we are working 

with other international partners to press all of the rebels to attend 

the talks. 

We have reached a sensitive time in our diplomatic engagement 

to achieve a successful political process in Libya. We are prepared 

to apply sanctions to any party that obstructs the peace process. 

But right now we are trying to work with the government that has 

accepted UNAMID, that has accepted to go to the peace talks, and 

we are trying to keep the international coalition that includes the 

dcolon on DSK2BSOYB1PROD with HEARING

13 

U.S., the Europeans, the African countries, the Arab countries, 

and, most importantly, the United Nations and the African Union 

on board with our effort. 

We are concerned about Darfur, but we also have to be concerned 

about making sure that the Comprehensive Peace Agreement is 

also fully implemented, and we must ensure that our efforts today 

will reinforce CPA implementation. 

While much has been accomplished during the nearly 3 years 

since its signing, the progress of the CPA has faltered in areas related to the North-South border, Abyei, oil revenue sharing, and 

the redeployment of forces. We will continue to lead efforts to address these challenges. Deputy Secretary Negroponte met with the 

Sudan contact group on Friday, September 21st, to refocus international attention on the CPA, and we are in constant discussion 

with the government of Southern Sudan, and now Special Envoy 

Natsios is on the ground today in Southern Sudan pressing for full 

implementation of the CPA. We will continue to work with the 

Intergovernmental Authority on Development, the Sudan contact 

group, as well as the new Special Representative for Sudan, Mr. 

Qazi, to try to bring renewed focus to implementation of the CPA. 

The United States, in conclusion, has and will continue to lead 

the world in responding to the situation in Sudan. We have provided over $4 billion in assistance to Sudan since 2005. While we 

are successfully increasing pressure on the Government of Sudan, 

we must also recognize that these efforts and any future efforts 

may impact the Government of Southern Sudan, as their delegation told us this week. As part of the CPA, the Government of 

Southern Sudan receives tens of millions of dollars in oil revenue 

each month from the central government in Khartoum. This influx 

of resources is unprecedented in a post-conflict situation and has 

allowed the Government of Southern Sudan to participate with the 

international community in the development and reconstruction of 

Southern Sudan. 

We share the commitment of Congress and the American people 

who are working to see an end to the suffering of the Darfur people. We, together with Congress’ ongoing support, will continue to 

exert all our efforts until the crisis in Darfur is ended and all the 

people of Sudan can live in peace. 

Thank you, Mr. Chairman. I am pleased to answer questions. 

Senator MENENDEZ. Thank you. Again, your full statements will 

be entered into the record, and I would ask you to summarize them 

in the context of 5 minutes. 

Secretary Dibble. 

STATEMENT OF ELIZABETH L. DIBBLE, PRINCIPAL DEPUTY 

ASSISTANT SECRETARY FOR INTERNATIONAL FINANCE AND 

DEVELOPMENT, DEPARTMENT OF STATE 

Ms. DIBBLE. Mr. Chairman, Ranking Member Shelby, and Members of the Committee, thank you for the opportunity to appear before you today to discuss some aspects of possible sanctions measures concerning Sudan. 

Sanctions seek to change behavior. To be effective, they must be 

carefully calibrated and coordinated. Naturally, timing and messaging are essential components of this process. The administration 

dcolon on DSK2BSOYB1PROD with HEARING

14 

and Congress together need to maintain a unified message on 

Sudan policy to maximize U.S. influence on the peace process. This 

is particularly true since the administration and Congress fully 

share the same objectives in Sudan—in particular, our common desire to end the violence in Darfur. 

But sanctions are only one part of the approach which also has 

to rely upon multilateral diplomacy and eventually changed behavior by the Khartoum regime itself. We have to ensure that our desire to send a strong message via sanctions does not counteract or 

even overwhelm progress on the political fronts. 

We have serious concerns about attempts to apply new sanctions 

on the Government of Sudan now at this moment. It would send 

the wrong message to the regime at a time when it is actually 

being helpful with peace talks and with the African Union/UN 

peacekeeping force. It would also send the wrong message to rebel 

movements, one of which just attacked an African Union peacekeeping base and killed 10 Nigerian peacekeepers. The rebels need 

to join the peace process rather than targeting international forces. 

Our most recent action on Sudan sanctions got the attention of 

Government of Sudan officials without undermining our multinational coalition on Sudan, and it was this increased pressure 

that helped bring us to where we are today. 

Required divestment will be seen by our allies as a U.S. Government action targeting their companies and could affect our ability 

to obtain cooperation on mutual action with respect to Sudan. 

Some of these key allies will be providing troops and equipment for 

the African Union/UN hybrid peacekeeping force. 

We need to look carefully at each of the Sudan bills and consider 

all aspects of their likely impacts, including on Southern Sudan 

and on multinational coalitions. We need a multinational coalition 

that includes the Chinese, the Arab world, the Europeans, and the 

African Union to build peace in Sudan. 

We recognize that individuals and particular funds may want to 

divest certain holdings for a variety of reasons. In fact, we do not 

take a position on private independent action by individual investors based on private sector research and analysis. 

However, the administration is opposed to affirmative Federal 

legislation that explicitly authorizes divestment campaigns at the 

State and local level. Sanctions policy needs to respond quickly to 

rapidly evolving events. Having one unified foreign policy gives us 

the flexibility to do this. State and local divestment efforts risk creating the appearance of a multiplicity of foreign policies, undercutting our policy flexibility and the clarity of the messages we send 

foreign governments. They also undermine the President’s constitutional responsibilities to conduct foreign affairs for the Nation. 

The Sudan bills under consideration all seek ways to use U.S. 

economic leverage to have an indirect impact on Sudan’s leaders by 

pressuring foreign companies that do business in Sudan. The primary approach in certain bills would have the U.S. Government 

create a black list. This is the most troubling approach. The administration has consistently opposed all requirements that the President or Treasury or any other U.S. Government entity affirmatively prepare a black list periodically of companies doing business 

dcolon on DSK2BSOYB1PROD with HEARING

15 

in Sudan. Such a list would target our allies, impairing multilateral efforts to aid the peace process. 

Another concept in play is a new SEC disclosure process. A third 

concept is an as-of-yet-unarticulated U.S. Government contracting 

certification procedure and procurement ban on prospective contractors who cannot certify that they either have no specific business activities in Sudan or, if they do, that they meet certain humanitarian criteria. These latter two proposals also pose some concerns, but we remain open to exploring them further as alternatives. 

In summary, sanctions are an important policy tool, but they 

need to be managed with maximum flexibility. Timing is everything, and we believe it is imperative to preserve the President’s 

flexibility to decide when and how to calibrate the application of 

sanctions to they can work to the maximum advantage. 

We look forward to our continued dialog with the Congress to ensure that sanctions are applied at the appropriate time and in 

ways that do not undermine the multilateral efforts which are essential to achieve our policy objectives for Sudan, including ending 

the violence in Darfur. 

Thank you very much. 

Senator MENENDEZ. Thank you, Madam Secretary. 

Director Szubin. 

STATEMENT OF ADAM J. SZUBIN, DIRECTOR, OFFICE OF 

FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY 

Mr. SZUBIN. Thank you, Mr. Chairman, Ranking Member Shelby, 

and Members of the Committee. Thank you for your continued and 

intent focus on the suffering and crisis in Darfur and for the opportunity to speak to you today about the tools we can bring to bear 

on this difficult problem. 

I know that this is an issue of vital and deep immunoglobulin to 

the Members of this Committee, to Congress, of course, to the administration, and to the American people as a whole. I believe, in 

fact, that it is a testament to the character of this country that so 

many people in every part of this Nation feel the suffering of the 

victims and refugees of Darfur as their own and are seeking desperately to help. 

From my first days in this position, I was tasked to develop and 

apply additional sanctions measures to help alleviate the crisis in 

Darfur. The President and Secretary Paulson made clear that we 

should spare no effort and draw on all of our authorities and resources. Our objective has been to encourage a negotiated resolution to this crisis by making clear to the Government of Sudan and 

other responsible parties that defiance of the international community will come at a heavy cost. 

Economic pressure has played a role in encouraging a resolution 

to this difficult and complex situation. As you know, the United 

States has had broad economic sanctions directed at Sudan since 

1997 based on the Government of Sudan’s support for international 

terrorism and human rights violations. In 2006, we acted with the 

U.N. to impose targeted economic sanctions against culpable individuals responsible for violence and undermining stability in 

Darfur. 

dcolon on DSK2BSOYB1PROD with HEARING

16 

This past April, on Holocaust Memorial Day, President Bush 

issued a clear warning to the Sudanese Government: either they 

would live up to their prior commitments and allow the deployment 

of a joint UN/African Union peacekeeping force or the United 

States would impose further economic sanctions on the Sudanese 

Government and seek a U.N. Security Council resolution to do likewise. 

When President Bashir did not follow through, President Bush 

did. On May 29th, Treasury announced a range of new sanctions. 

We designated two senior Sudanese Government officials that had 

acted as liaisons between the government and the Janjaweed militias, including their chief of military intelligence and their minister 

for humanitarian affairs. We also targeted Azza Air Transport 

Company, which had been conveying artillery, small arms, and ammunition from Khartoum to Darfur. The government has not been 

the only culpable party, of course, and we also designated Khalil 

Ibrahim, the leader of a rebel group responsible for violence in 

Darfur. 

On that same day, we designated 30 additional companies owned 

or controlled by the Government of Sudan, thereby disrupting their 

access to the U.S. economy and the U.S. dollar. These companies 

included five petrochemical companies, Sudan’s major telecommunications company, and a company that had supplied armored vehicles to the Sudanese Government for use in military operations in Darfur. In addition to these actions, we significantly 

stepped up our efforts to enforce sanctions on Sudan sanctions, 

making this enforcement a top priority within OFAC, my office. We 

are now aggressively pursuing a number of violators to ensure that 

compliance with these sanctions is as strong as the sanctions provisions themselves. 

Congress and this Committee have played an instrumental role 

in facilitating these actions. Indeed, just yesterday morning, Congress passed a bill, sponsored by Chairman Dodd, which provides 

for significantly increased civil penalties for those who violate 

IEEPA—the core statute under which we impose sanctions against 

Sudan, as well as terrorist financiers, WMD proliferators, Iran, 

Burma, and other sanctions targets. Without question, this bill will 

make our sanctions more effective, and I would like to thank this 

Committee, as well as others in the House and Senate, including 

Senators Durbin and Brownback, for their strong and swift support 

in passing this bill. 

Two months after the sanctions I just described, with the leadership of the United States, the U.N. Security Council adopted an important resolution which my colleagues from the State Department 

have already described. Thus far, there have been positive indicators. As Assistant Secretary Frazer will describe in more detail, the 

Sudanese Government publicly announced its acceptance of a hybrid peacekeeping force, which is unprecedented. And later this 

month, she and my colleague, Assistant Secretary Dibble, described 

the peace conference that will be held in Tripoli, Libya, which will 

hopefully bring all of the parties of this conflict together and move 

them in the direction of settlement. 

While there have been positive recent developments, the diplomatic road ahead will no doubt require patient and difficult work. 

dcolon on DSK2BSOYB1PROD with HEARING

17 

For our part, we stand ready to provide whatever support is needed 

to pressure those who would stand in the way of peace. 

I know that this Committee has been watching these issues very 

closely and is considering additional Sudan-related measures. I 

look forward to answering your questions both with respect to the 

actions we have taken to date and additional policy proposals, and 

I look forward to continuing to work together with you to address 

these critically important issues. 

Thank you. 

Senator MENENDEZ. Thank you, Director. 

We will start a round of questioning of about 5 minutes apiece, 

and then we will see if there is need for a second round. I will start 

off myself. 

Mr. Szubin, in May, the Committee marked up and approved S. 

1612, the International Emergency Economic Powers Enhancement 

Act, which vastly increases penalties on companies that violate 

U.S. sanctions law. The Senate approved the bill unanimously in 

June. The House passed it yesterday. The President, I understand, 

is going to sign it rather swiftly. 

Now, your Department strongly endorsed that bill, did it not? 

Mr. SZUBIN. Yes, sir. 

Senator MENENDEZ. And from what I understand, you all believe 

that it should be enacted without delay. Is that the case? 

Mr. SZUBIN. Yes, sir. 

Senator MENENDEZ. Secretary Frazer, the State Department also 

supported that bill, did it not? 

Ms. FRAZER. Yes. 

Senator MENENDEZ. And, in fact, not only did you support it, but 

in view of the fact that the administration wants it enacted into 

law, that is going to take place even though the talks in Libya are 

about to happen. Yet you come before the Committee and you collectively cite that you oppose this legislation because, I think, Secretary Dibble, you mentioned timing and messaging. 

What is the difference? You have a sanctions regime that you are 

all enthusiastically pursuing before the peace conference in Tripoli, 

and yet you are back-pedaling on this effort, particularly as it relates to Sudan. 

Mr. SZUBIN. If I could, Senator, the key legislation which the 

Congress just passed yesterday would enable us to crack down 

more firmly on those who violate our sanctions, our existing sanctions on Sudan, as well as our other sanctions programs, such as 

those I mentioned—Iran, Burma, terrorist financing, WMD proliferation, and narcotics trafficking. It is an authority that we have 

desperately needed for years, frankly. Our sanctions penalties were 

out of date such that if somebody issued a series of transactions, 

exported goods, or facilitated financial flows to Sudan that were 

prohibited, they might get away with a slap on the wrist. And we 

cannot have our sanctions be viewed as—a penalty would just be 

a cost of doing business. 

So we asked and we were very grateful to Congress for supporting that, but I do not view this measure as coming in any way 

into conflict with the ongoing diplomatic processes which are going 

on, as you mentioned, in Libya. What these will do is allow us to 

enforce meaningful penalties on those who are violating—— 

dcolon on DSK2BSOYB1PROD with HEARING

18 

Senator MENENDEZ. I fully understand that, but the point is you 

want that enforcement because you want to send a very clear message that sanctions can work and have a consequence. Is that not 

the case? 

Mr. SZUBIN. Absolutely. 

Senator MENENDEZ. Then that is my point. Sanctions can work 

and they have a consequence. But here, as it relates to Darfur, the 

State Department seems to mean in its testimony to be overly optimistic and overly sensitive to upsetting the Bashir government. 

Isn’t it not true, Madam Secretary, Secretary Frazer, that Bashir 

has time and time again told the international community that he 

would do X, only to back-pedal and not make that happen? 

Ms. FRAZER. Yes. Sanctions—— 

Senator MENENDEZ. Yes. But the point is then, if the answer to 

that is yes, then it seems to me that you would want to have all 

the leverage possible at the end of the day to have him understand 

that we are serious about the consequences—it does not mean you 

have to invoke them, but you have a tool in your arsenal, an arrow 

in your quiver to be able to use. And I do not understand exactly— 

what I have not heard from any of you, really, outside of the generic context of timing and messaging, you know, the focus of this 

legislation you really have not attacked in terms of its specifics. 

You know, there are four distinct sectors of the Sudanese economy that are linked to supporting policies which have contributed 

to Darfur policy: oil, mineral extraction, power production, defense. 

This is not a blanket divestiture measure. 

Furthermore, the legislation specifically carves out business investments in the South where we are hopeful for progress. 

Thirdly, the legislation before the Committee is specifically written to expire when the requirements for all corresponding Federal 

sanctions are satisfied. 

And, fourthly, in addition to helping apply pressure to the 

Sudan, the legislation is meant to ensure that socially conscious investors have the right—the right—to refrain from investing in business operations that contribute to genocide. 

I cannot quite understand how the State Department comes before this Committee and says this is inappropriate. 

Ms. FRAZER. Perhaps I can answer some of what you have asked. 

I think it is important to be very clear that the sanctions that were 

imposed on May 29th are having effect, and the enforcement of 

those sanctions from 1997 has increased and is having an effect, 

specifically the sanctions that Adam Szubin, I must say, has been 

really very effectively applying, and which the IEEPA legislation 

will give him even more ability to tighten the rope around this 

Government, is the reason why the Government of Sudan has accepted UNAMID today. They are effectively shutting down the 

banking system in Khartoum today. We have the necessary pressure based on the sanctions that we imposed on May 29th. 

And so what I would say is, in terms of the specific legislation, 

my concern about it is, frankly, the additional work that it is putting on OFAC when we need OFAC to be looking after identifiers 

of Government of Sudan officials to further tighten the impact on 

that government instead of going through a list of companies, you 

know, trying to find a list of companies which have a diffuse imdcolon on DSK2BSOYB1PROD with HEARING

19 

pact. What we need is the targeted impact that he is already applying due to the May 29th sanctions, which are having an effect. 

The second point I would make in terms of the issue of timing 

is that indeed we do have to keep this coalition. If the Government 

of Sudan starts backtracking, which is the way it does—I mean, 

there is absolutely no doubt about it. This is a government that 

makes an agreement and then tactically starts to put road blocks 

in the way. If they start that process, then we have the sanctions 

necessary, and we may come back to you. In fact, this legislation 

could be fine-tuned so that we could put the necessary pressure. 

I think it is important to say, however, that right now the ball 

is in the UN’s court. The issue of getting those peacekeepers on the 

ground is really one that we have to put the pressure on the U.N. 

and keep our dialog with the U.N. That is where the obstacle is, 

as well as on the peace process. The ball is in the rebels’ court on 

the peace process. And so we need to be clear about when we use 

the sanctions, it is to impact this government for its negative behavior. But at this moment in time, the ball is not in the Government of Sudan’s court. 

I am sure that they will backtrack, so I think that we have to 

be at the ready with new sanctions. But we also have effective 

sanctions right now that are putting the necessary squeeze on this 

government. 

Senator MENENDEZ. Well, I appreciate your answer. The legislation actually calls for additional assistance to OFAC to be able to 

meet its challenge. And, second, it seems to me that whatever refinement you want to suggest, you suggest to the authors and to 

the Committee, because it is my sense that this will move forward. 

The distinguished Ranking Member, Senator Shelby. 

Senator SHELBY. Thank you. 

Do any of you have an estimate of the amount of revenue and 

the percentage of GDP that the Sudanese Government derives from 

foreign investment and trade? Do you, Mr. Szubin? 

Mr. SZUBIN. I do not. 

Ms. DIBBLE. No. 

Senator SHELBY. Could you furnish that for the record? Isn’t that 

important? You need to know what they are doing and how important this is to their GDP if it is going to work. 

Do you have any idea as to the extent that the Sudanese Government is dependent on funds like that for the financing of its actions 

in Darfur? In other words, is there a connection between financing 

their actions and something we can do about it by sanctions? 

Mr. SZUBIN. I do not have—— 

Senator SHELBY. Do you need what I am asking you? 

Mr. SZUBIN. Of course, Senator, and I do not have the figures 

with me today. 

Senator SHELBY. Could you furnish that for the record? 

Mr. SZUBIN. Yes. It is unquestionably true that foreign investment, particularly in Sudan’s petrochemical sector, is the major 

source of funds for their government, and it allows them—— 

Senator SHELBY. It is a great percentage of their GDP, is it not? 

Mr. SZUBIN. Yes, sir, it is. 

Senator SHELBY. And you are really talking about oil and petro 

dollars, are you not? 

dcolon on DSK2BSOYB1PROD with HEARING

20 

Mr. SZUBIN. Yes, and that is one of—— 

Senator SHELBY. Oil and gas. 

Mr. SZUBIN. Exactly. That is one of the reasons we have focused 

on that sector so intently with our sanctions. So just to give you 

an example, not only have we recently in May named five of their 

state-owned petrochemical firms, but in the past, we have gone 

after conglomerates that the Government of Sudan controls but 

that are co-owned by Chinese, by the Malaysians, by the Indians, 

to target all of the major Sudanese petro firms and say, ‘‘You are 

not going to do any business with the United States, and we are 

going to try to disrupt your business that you are doing anywhere 

in the world.’’ 

Senator SHELBY. Is there evidence regarding the conduct of U.S. 

and foreign companies operating in the Sudan? In other words, 

that the companies targeted for divestment at the State and local 

levels are actually altering their behavior? Is there anything going 

on there? Do you measure that in any way? 

Mr. SZUBIN. With respect to the impact of State divestment? 

Senator SHELBY. Yes. 

Mr. SZUBIN. I am not aware of that. 

Senator SHELBY. You do not have any—— 

Mr. SZUBIN. I do not have that evidence, no. 

Senator SHELBY. Secretary Dibble, China’s role is very central to 

all of this, as some of us see it. How has China reacted to the targeting of PetroChina and its parent company, China National Petroleum Company, by the divestment campaign? Have they 

changed their behavior in any way, or does oil trump everything, 

oil and gas? Have you seen any indication that Pakistan, India, 

Malaysia, or any Federal Government country is incorporated concern for human rights into its foreign investment policy? 

Ms. DIBBLE. I am not aware of any specific reaction from the 

Chinese on this particular issue. I do know that this has—our efforts and our sanctions—and I am talking more broadly than just 

the Sudan sanctions, but our sanctions across the board have gotten the attention of foreign governments. And as Assistant Secretary Frazer said, you know, we need some of these very governments to help us in the coalition. 

So I think they have taken notice of this. I am afraid I cannot 

quantify what that reaction might be. But I think they have taken 

notice. 

Senator SHELBY. A lot of you here at the table, you are experts 

on the situation in Sudan because of your professionalism. Could 

you tell us what form you believe any potential legislation should 

take? In other words, I believe we are going to pass a strong bipartisan piece of legislation coming right out of this Committee, and 

it has got to be meaningful. If it is not meaningful, it is useless; 

it is worthless. It is just a statement with no teeth, and we do not 

want that. 

What do you want? Is the administration out of sync with the 

Congress on this? 

Mr. SZUBIN. I do not think so at all. I think, in fact, in my conversations with your staffs and others on this Committee, we have 

exactly the same objectives here, which is, How do we get down 

this very difficult road of a negotiated peace agreement and ensure 

dcolon on DSK2BSOYB1PROD with HEARING

21 

that we do not see people veering off the road, as they have in the 

past? And how do we make sure that people see the costs and the 

very significant costs of misbehavior? So in terms of being in sync, 

very much so, Senator. 

In terms of what additional legislation would be needed, whenever we have been asked in the past, we said we need stronger 

penalties. We need to make sure our sanctions are enforced 

and—— 

Senator SHELBY. It has got to have teeth, has it not? 

Mr. SZUBIN. It has to have teeth, and Congress responded very 

swiftly, and I just want to thank you all again for the support with 

respect to that, because we asked and you delivered as quickly as 

could have been expected. 

When it comes to applying additional proposals on top of that, 

my colleagues from the State Department, of course, talked about 

the timing and the very delicate process that is coming right now. 

And what we are hearing from the government, at least what we 

are hearing right now, is exactly what—— 

Senator SHELBY. Explain what you mean by ‘‘delicate.’’ I mean, 

people are dying every day. 

Mr. SZUBIN. That aspect—— 

Senator SHELBY. People are looking the other way. So what is 

delicate about doing something about this or trying to do something 

about it? 

Mr. SZUBIN. This is something where my colleagues will be able 

to speak more articulately than I, but just to give one example, the 

U.N. Security Council Resolution 1769, which just passed late this 

summer, was a 15–0 vote, if I am not mistaken. In other words, 

we had consensus, including from the Chinese, that we need to deploy peacekeepers, that the situation in Darfur requires a serious 

response. And that is a remarkable accomplishment thanks to the 

diplomats sitting at this table and others in our Government. 

Senator SHELBY. You do not believe that China has any interest 

in sanctions against their own China Petroleum Company, do you? 

Mr. SZUBIN. I am sure they do not. And these kinds of targets, 

state-owned companies, present a particularly difficult challenge 

when it comes to economic pressure. If you take the Malaysian 

company, Petronas, which is operating there, they are, frankly, not 

subject to economic pressure. They are not traded on any exchange 

in the world, certainly not on any U.S. exchange, and U.S. investors are not holding their stock. And so there is a limit to how 

much pressure we can apply financially to address that situation. 

I think ultimately it comes down to what can we do diplomatically 

to convince them to either change their ways or use their influence 

and their leverage within the Sudanese economy for good and to be 

pressuring the government that we all need to see a change in behavior, we all need to see peace in Darfur. 

Senator SHELBY. Well, whatever we have been doing is not working, is it? 

Mr. SZUBIN. Well, I think the recent months—— 

Senator SHELBY. The slaughter is still going on. 

Mr. SZUBIN. The situation there has gone on longer than it ought 

to have and longer than any of us would have liked to see. The developments over the last few months, which Assistant Secretary 

dcolon on DSK2BSOYB1PROD with HEARING

22 

Frazer will speak to, are among the more positive that we have 

seen recently, and the government seems to be saying what we 

would like it to. It is a question now of follow-through. I would turn 

it over to Assistant Secretary Frazer. 

Ms. FRAZER. Yes, Senator Shelby, I will speak to specifically the 

delicacy of this moment in time. I think it is on two levels: one, 

what is going on in Sudan itself; and, second, in terms of the international coalition, which has been extremely difficult to build. 

In the Government of Sudan, it is a very divided government. 

The pragmatists right now are in the ascendance. They have convinced those who would pursue an end to this through military 

means that, in fact, allowing the peacekeepers to come in is the 

right way, going to the negotiating table is the way to end this crisis in Darfur, as well as to end their isolation internationally, at 

least their isolation in the Western world, because they are not exactly isolated internationally—which comes to my second point, 

which is the international coalition. The most important thing that 

we could do today is to get other countries on board with further 

sanctions, to put multilateral sanctions, because as long as the 

United States has unilateral sanctions—in fact, we are shutting 

down their access to the dollar economy, they are just moving it to 

euros now. You know, they just find banking outlets in the Middle 

East. 

And so we have got to get other governments on board with us, 

and if we are seeing, as when the Government of Sudan has accepted UNAMID and has accepted to go to the peace table to negotiate 

peace, if we are seeing this, now imposing yet another set of sanctions when we have very effective ones in place at this moment in 

time, we probably will lose that international coalition. Or the coalition, which is not very firm anyway, we have to keep it on board. 

And so that is what we mean by the delicacy of the moment. 

But as I said, I think that we have to be ready because we do 

know the character of this government, which backtracks constantly. 

Senator SHELBY. This government is the problem, is it not? They 

aid and abet the militia. They aid and abet everything. I wish you 

well. 

Thank you for letting me go over on my time. 

Senator CASEY [presiding]. Thank you, Senator Shelby. 

Senator Reed. 

Senator REED. Thank you very much, Mr. Chairman. 

Secretary Frazer, do you feel that the recent attack on the peacekeepers force was either condoned or encouraged by elements within the government in Khartoum? 

Ms. FRAZER. I do not think it was condoned and I do not think 

it was encouraged, but it is an interactive process. And I think that 

there is no justification for the attacks. And one explanation—we 

are still trying to gather information on what happened and why. 

But one explanation is that these were break-off rebel groups who 

were seeking supplies, equipment, and so they attacked the AMIS 

to get those supplies and equipment. 

Another is that when the rebels attacked the government police 

and killed some 51 police in Kurdufan, the government responded 

militarily, and that this was then a counterattack with the rebels 

dcolon on DSK2BSOYB1PROD with HEARING

23 

believing that AMIS was not—took the side of the government. And 

so it is the dynamic. And so whereas, I do not think the Government of Sudan aided or abetted or encouraged this attack, I do 

think that the Government of Sudan’s action is part of the context, 

the reason for this type of back-and-forth between the rebels and 

their attack on AMIS. It is not excusable. 

Senator REED. So your at least working conclusion is that the 

Khartoum government will cooperate with the deployment of the 

peacekeeping force. 

Ms. FRAZER. My experience is that we will have to continue to 

put pressure on this government at every moment in time to make 

sure that they cooperate, because it is a divided government. There 

are those who support UNAMID fully, and then there are those 

who absolutely oppose it. And it is a tactically oriented government, and so we have to continue to keep the pressure on the government. That is my experience. 

Senator REED. Well, I think we all sort of share your conclusion. 

I think the debate here is what kind of pressure from what direction, et cetera, because frankly I think the heart of the proposal of 

Senators Durbin and Brownback and others is that this is more 

pressure continuously applied, and, in fact, it is the type of pressure that might get their attention since it is not the carefully calibrated pressure that the administration is applying. It is much 

more blunt. And with all due respect, the ‘‘delicacy’’ and the ‘‘regime in Khartoum’’ are words I do not assume to hear in the same 

paragraph. But I know what you are saying, you know, that this 

is a pretty difficult situation to manage. 

Director Szubin, the sanctions that are in place today would prevent these companies and individuals from doing business with 

American companies, and likewise American companies doing business with these individuals and companies. Is that a fair summary? 

Mr. SZUBIN. Yes, Senator. 

Senator REED. Would it prevent American companies from investing in these companies? 

Mr. SZUBIN. Yes, Senator. 

Senator REED. So a pension fund in Rhode Island or Illinois now 

under this could not invest in these companies directly or indirectly. Is that true? 

Mr. SZUBIN. Right. 

Senator REED. Is that clear to—do you think that is clear to the 

public out there that this is the case? 

Mr. SZUBIN. I think it is, and we engage in a great deal of outreach to try to educate the public, both the normal sectors that we 

deal with, whether it is the trade community or the financial community, as well as others with respect to what are the contours of 

our sanctions and what are the prohibitions. But not only can no 

U.S. person conduct any business or invest with the companies that 

we have named; they cannot conduct any business with any Government of Sudan-owned or -controlled company, and any assets of 

those companies have to be frozen if they come into the possession 

of a U.S. person, which would include a U.S. person overseas. If 

there is a U.S. bank in Europe or in the Far East that comes into 

the possession of a wire transfer that is going to one of these comdcolon on DSK2BSOYB1PROD with HEARING

24 

panies or coming from one of these companies, that money needs 

to be blocked and frozen. 

Senator REED. So effectively you have a list of these companies. 

Some of the discussion today is that we do not want a list published of these companies as the legislation would, but there is a 

list of these companies, correct? 

Mr. SZUBIN. Correct. If I could, there are, I think, two different 

lists that have been discussed. We maintain a list of Government 

of Sudan-owned companies where we are targeting at Sudan itself. 

There has been discussion of and I think some of the legislation 

would call for creating a list of non-Sudanese companies, thirdcountry companies in Europe or elsewhere that are doing business 

in Sudan—what some people would call a ‘‘secondary sanction’’— 

and that list currently does not exist. At least under the Government letterhead it does not exist. I know there are many private 

nongovernmental groups that look to lists like that, that have developed lists like that, and that are using them. 

Senator REED. Well, as I think you suggested in one of your previous responses, most of these Sudanese companies are not listed 

on any stock market, that there is no ability to invest in that. That 

is correct, isn’t it? 

Mr. SZUBIN. By and large, the large petrochemical companies 

that we are talking about are not listed, certainly not in the United 

States. 

Senator REED. Well, let me ask it another way. That is, are there 

any companies—this goes to sort of, I think—maybe we already 

have this policy in place. Are there any companies that are publicly 

traded that you have listed or put on a sanctions list? 

Mr. SZUBIN. I am trying to think, and I do not want to answer 

incorrectly. I do not know of any of these Government of Sudanowned companies, and here we are primarily talking about companies that are operating in Sudan, in Khartoum or in the oil fields, 

that are traded on—certainly not on a U.S. exchange. They would 

be prohibited from doing that. But I do not know of others that are 

traded on, say, a European exchange. 

Senator REED. It seems to me that, you know, this is a question 

of how much is enough in some respects, which, clearly, you and 

your colleagues are trying to put pressure on the regime. But it 

would seem to me that—and I do not know the direction of investment flows, but whatever inhibitions that are felt by these companies are more than made up with by foreign investors, private companies coming in and putting money into the oil fields. And at the 

heart of what I think our colleagues are trying to get at is trying 

to cutoff that flow of funds, too, which would send a very strong 

signal to the Government of Sudan. But thank you for your efforts. 

Thank you, Mr. Chairman. 

Senator CASEY. Senator Bunning. 

Senator BUNNING. Thank you. I look at the questions that I have, 

and at least four of them have already been asked. 

Why would it be counterproductive to allow States and local governments to make their own laws on businesses dealing with other 

countries? Any of the above. 

Ms. DIBBLE. Senator, we are not opposed to private divestment 

actions. As some of your colleagues have noted, there is divestment 

dcolon on DSK2BSOYB1PROD with HEARING

25 

taking place in various States, and they are looking at this. We 

have never said we have opposed that. What we are opposed to is 

legislation that affirmatively authorizes State and local government divestment because of the concern that it creates a multiplicity of State and local government foreign policies that could potentially impact on the President’s ability to direct the foreign policy of—— 

Senator BUNNING. But as long as there is an overriding sanction 

by the Federal Government, don’t the State and local governments 

have to comply? 

Ms. DIBBLE. Yes, they would. 

Senator BUNNING. Yes. 

Ms. DIBBLE. Yes, they would. 

Senator BUNNING. Well, is there anything to prevent State and 

local governments from going more stringent than the Federal Government? 

Ms. DIBBLE. No, and I think in some cases—if I understand the 

question, Senator, in some cases they are doing that now. 

Senator BUNNING. Given the problems that the Securities and 

Exchange Commission had assembling a list of companies doing 

business in terrorist countries, could the Government make a more 

accurate list of companies doing business in Sudan? 

Mr. SZUBIN. Well, I will try to answer that. As I mentioned a few 

moments ago, these lists—— 

Senator BUNNING. The private—— 

Mr. SZUBIN. The private lists are out there, and I believe the 

Sudan Divestment Task Force will be testifying on the subsequent 

panel. They issue a list that I think is updated quarterly with respect to the activities of foreign companies that are investing in 

Sudan in particular sectors and that have not complied with a 

whole set of criteria with respect to their business and their humanitarian profile. 

When it comes to the Government going in and trying to reinvent 

that wheel, issue a list of their own, you sort of get into the question of what are the additional benefits of having a Government list 

and what costs would come with it. And the costs include the foreign policy concerns of the U.S. beginning to blacklist, if you would, 

European or Asian companies and exactly those governments 

whose support we are going to need to keep the pressure on in 

Khartoum. The costs would also come in the form of just the very 

serious logistics costs that the Government would bear, logistical 

hurdles that we would bear in trying to put out this kind of list, 

because the kinds of information that we draw on in analyzing 

flows or trade flows into Sudan are, for the most part, classified. 

So, of course, we are not going to be able to put out information 

that is derived from classified information. 

When we are looking to the public information, which the private 

sector has access to, we would need to limit ourselves to that which 

we think is solidly sourced and corroborated and reliable before we 

could, of course, put a Government seal on it and say here is our 

list. 

So I think at the end of the day, you would see a much shorter 

list if it came out from the U.S. Government than those which are 

already in circulation. 

dcolon on DSK2BSOYB1PROD with HEARING

26 

Senator BUNNING. Secretary Frazer, I have got to ask you, why 

is it difficult to get other governments to act in conjunction with 

the United States if they actually know what is going on in Sudan? 

Ms. FRAZER. Senator, unfortunately, many governments do not 

know what is going on in Sudan. 

Senator BUNNING. Well, I mean, we do. 

Ms. FRAZER. We do. 

Senator BUNNING. And certainly is our credibility that bad—are 

you as an entity in the State Department so bad at explaining to 

other governments the horrific goings-on in Sudan right now? 

Ms. FRAZER. No. But Secretary Rice has certainly done a lot to 

build the coalition that led to the 15–0 Security Council resolution 

that authorized the peacekeeping force. But the Government of 

Sudan goes to the Middle East, claims its sovereignty, and says to 

the other countries in the Middle East that they should not have 

international peacekeepers on their territory. They raise issues 

of—— 

Senator BUNNING. But, then, what action should the U.S. Government take toward those other countries, if anything? 

Ms. FRAZER. Well, we certainly take action to convince them and 

we have been successful in building that coalition to convince them 

to stay with us, and that is what we are trying to maintain. But 

there are many issues in the world that we need these governments’ engagement on. Sudan is one of the issues. And so we have 

to continue with multilateral diplomacy. And as I said, the Secretary has done an effective job of getting Egypt, Saudi Arabia, 

Libya, South Africa, and many other countries on board with our 

approach. 

Senator BUNNING. One last question, and I am sorry this is just 

a little over my time. There are an awful lot of American people 

that know what is going on in Sudan. What can the average American do to help, in sanctions, in—in other words, you cannot volunteer to go to Sudan as a peacekeeper—or can you? Or what can we 

as the average Americans do? 

Ms. FRAZER. Well, I think the average American, I mean, the 

young people on our college campuses are being very effective in 

keeping this issue at the forefront. 

Senator BUNNING. Up. 

Ms. FRAZER. Absolutely. And from our perspective, helping us to 

get the resources, you know, with the Congress so that we can be 

effective in putting peacekeepers in there, building the camps that 

are going to be necessary for where those peacekeepers are going 

to live, providing humanitarian assistance that is necessary. As I said, we provided about $4 billion over the last 2 years to 

help on the humanitarian situation, the peacekeeping front and the 

peace process. And so I think that the American public needs to remain engaged the way that they are and keep pressure on us, including the debate that is going on right here today at this Committee. I think that this is effective. It to me is the best of America. 

We need to look at what are the various tools that we can use to 

end this genocide in Sudan. And so this is one of a number. 

What I am saying is that I think that the sanctions from May 

29th have been absolutely effective in changing this government’s 

behavior, and the government is where we need it right now. We 

dcolon on DSK2BSOYB1PROD with HEARING

27 

need to keep the coalition together. But I think that the debate 

that is going on here is a healthy one and an important one, and 

it is for your deliberation, of course, on what steps further to take. 

But, that is, the reflection of America is right here, I think, in this 

room today. So those young people should continue their activism. 

Senator BUNNING. Thank you very much, Mr. Chairman. 

Senator CASEY. Thank you, Senator Bunning. 

I wanted to pick up, Madam Secretary, where you left off. First 

of all, I want to thank you and your colleagues for being here today 

and for your public service. Public service is usually difficult. The 

kind that you are doing is particularly difficult. And we do not 

want to be too combative here, but I said earlier today that you 

had a high burden of proof in terms of making your case, and I 

think that is still the case. 

I wanted to highlight just some excerpts of your testimony and 

then also talk about the legislation and have you react to that. 

Secretary Frazer, when you were testifying, you highlighted a 

number of things. I think you outlined the challenge we have in a 

very full and significant way. But I was struck by a couple of statements that you made that really, I think, caused me to question 

why we are having—why there is such a disconnect here in terms 

of our position in the Congress, or most of the Congress, and the 

administration’s position. 

On page 2 of your testimony, you talked about, and I am quoting, 

‘‘A welcome and useful initiative at this juncture would be for Congress and other concerned groups to issue statements’’—to issue 

statements—‘‘calling for the rapid deployment of the UN/AU hybrid 

force and calling on all parties to participate in the . . . process.’’ 

So you called for a statement there. 

On the next page, page 3, you highlight, aptly, the chaotic nature 

of what has been happening on the ground, citing the killing of the 

10 peacekeepers. 

On page 4, in the first full paragraph, the middle of the page, 

‘‘we’’—meaning the Federal Government, the U.S. government— 

‘‘insist on nothing less than full cooperation.’’ 

And finally, on page 6, you mention that the Federal Government, the U.S. Government has provided over $4 billion in assets 

to Sudan since 2005. 

Secretary Dibble, in your testimony, in the first paragraph, 

‘‘Sanctions seek to change behavior,’’ which you mentioned. You 

talk on page 2 about increased pressure that has helped to bring 

us where we are today. 

My point in all of this is that there is some common ground here 

in the sense that we all agree that sanctions and economic pressure 

and other kinds of pressure do work, and you are seeing some results from that, and we appreciate that. We appreciate the difficult 

situation the administration is in and the work that the administration has done to date. 

But I have to tell you, when you juxtapose those statements and 

that, I think, agreement between the debate we are having today, 

you juxtapose that next to the basic provisions of the Senate—at 

least the Senate bill that I have cosponsored, Senator Durbin’s legislation—and I will just highlight a couple of provisions that were 

in his testimony and ask you to comment. 

dcolon on DSK2BSOYB1PROD with HEARING

28 

One of the elements of this legislation is to first require the administration to create a list of companies supporting the Sudanese 

regime. I cannot understand why that is a big problem. Also, requiring those companies to report to the SEC. Third on his list, requiring the administration to report on the impact thus far of current economic sanctions. Just asking for the administration to report on the impact. 

Further down in his list, authorize State and local governments 

to divest from companies supporting the regime. I realize that is 

controversial. I will get back to that in a moment. 

Further down the page, increasing civil and criminal penalties 

for sanction violators. 

Another provision, studying how the Federal employees’ Thrift 

Savings Plan can create a terror-free investment fund. 

And, finally, with respect to Director Szubin, authorize additional 

funding for the Office of Foreign Assets Control within the Treasury Department. Now, I have to say I am sure you are not against 

that provision. 

[Laughter.] 

Even as we debate. 

But my point is that a lot of what is in this legislation is, I 

think—I should say contains requirements that the Federal Government does every day of the week, requiring something to be 

studied, requiring a list, monitoring how a particular entity is performing. In this instance, you have sanctions in place, and you 

have a call for requiring a list of companies. And on top of all that, 

when it comes to the local and State government impact—I was a 

State treasurer. We have the State treasurer of Rhode Island here. 

We know that when you walk in the door and say, you know, we 

might have to remove or limit our investments in your company, 

companies respond. We know that. It is human nature. 

But for the life of me, I cannot understand why there is such a 

full-court press against this legislation when you go through the 

elements of what we are talking about. And I will stop talking in 

a moment, and I think this required a statement and not a series 

of questions. But when you consider the frustration, as you have 

highlighted, the intensity for real concrete action here, demonstrable progress here that so many people feel in our country, and 

you also consider the fact that what you are saying to State governments, local governments, pension funds, citizens across America, 

that you have a tool—you are putting a tool on the table, you who 

are in State and local government and otherwise, and we know 

that tool probably will work, but we do not want you to use that 

tool, and we are going to prevent you from exercising that option, 

I just think it is the wrong policy. 

And you talk about having several or many, a multiplicity of foreign policies here. One of the best ways to sing from the same 

songbook, one of the best ways to unify our efforts is to make sure 

that the Federal Government gives State and local governments 

the authority to do what we know can have an impact. 

So it is a long, long statement and a long question, but I would 

like you to take a moment, as best you can, to rebut some of the 

elements of this bill in addition—or apart from just the State and 

local government divestment issue. Secretary Frazer? 

dcolon on DSK2BSOYB1PROD with HEARING

29 

Ms. FRAZER. I would just say—I think that this is really best 

handled by my colleagues, but I would just say I support reporting 

on the impact of current sanctions that is in the bill now, because 

I think that report would tell you how effective we have been, particularly—the enforcement has gone up significantly, but particularly since May 29th, and how those sanctions are choking this government. So I support that part of the bill. 

Senator CASEY. So we have got agreement on that. We have got 

agreement on that he needs more money for his office. 

[Laughter.] 

And we agree that economic sanctions and pressure work, so we 

are making progress. 

Ms. DIBBLE. I think there is a lot more common ground, Senator, 

than perhaps appears. I think we are all working toward the same 

goal, and the goal is to keep the pressure on the Government of 

Sudan and to keep the international coalition together. Where we 

perhaps differ is exactly, you know, how to get there. 

I think some of the elements of this legislation—and we have 

talked a bit about the divestment portion of it. I am sure Adam 

Szubin is not going to turn down any additional OFAC funding. We 

do have—the legislation that was passed yesterday puts additional 

teeth into our existing sanctions. 

I think the point is we want to be able to continue to ratchet up 

and to have the flexibility to apply pressure where we see it is 

needed at a particular time. I think the evidence since May, when 

the new sanctions were announced, we have gotten the attention 

of the Government of Sudan. So I think our existing sanctions are 

working. I realize there is frustration, and there is frustration on 

our part as well, that the situation in Darfur is continuing. But we 

do feel that we are moving in the right direction, perhaps not as 

fast as either you or we would like to move. But we feel we do have 

the tools we need right now to continue to maintain that pressure. 

Senator CASEY. I have to move on, and Senator Brown has been 

patiently waiting. Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. I just have one question of Secretary Frazer. 

I know of your position. I have read of it. I am sorry I got here 

late, and I am chairing for Senator Casey in a moment, too. But 

I know that you think this resolution gets in the way of your diplomatic efforts. What kind of tangible benchmarks of progress can we 

expect as a result of the conference in Tripoli this month? What 

should we be looking for so that we can believe that your position 

is correct? 

Ms. FRAZER. Well, frankly, I think that we can look at benchmarks for the conference in Tripoli, but I think that the more important benchmarks are on UNAMID’s deployment. And I say that 

because it is by getting a peace force on the ground that you can 

create—you can end this chaotic environment, which then puts 

more pressure on all parties to effectively negotiate. 

And so I would suggest that the benchmarks be UNAMID, but 

if we were going to talk about benchmarks being the Tripoli talks, 

obviously it is going to be very difficult, because as I said, the key 

block right now is the rebel groups and their fragmentation. And 

so trying to get the rebels to the table I think is critically impordcolon on DSK2BSOYB1PROD with HEARING

30 

tant. But that is not going to give you, I think, a benchmark for 

judging the Government of Sudan’s behavior. They can sit back and 

say that they are fully on board with a peace agreement because 

the rebels themselves are not coming to the table. If you want 

something to judge the Government of Sudan’s behavior, again, it 

is UNAMID. That is what matters. Is the government going to 

allow us, you know, to get the visas necessary? Will the government allow the equipment to come in? Will the government put up 

road blocks for who the peacekeepers will be? Will they start saying this country is not acceptable, that country is acceptable? 

So I would focus on those benchmarks more so than the negotiations because it is the rebels that are the primary problem at this 

point in time. The government can sit back. 

Senator BROWN. Thank you. 

Thank you, Mr. Chairman. 

Senator CASEY. I think at this moment we will change to the 

third panel, and Senator Brown will take over at this point. 

Thank you. 

Senator BROWN [presiding]. Thank you all for joining us. I will 

introduce each of the—well, I will introduce four of you, and my 

friend, the senior Senator from Rhode Island, will introduce Mr. 

Caprio, whom he specifically requested to introduce. And I will remind each of you that your statements are in the record if you 

would like to not exactly read your statement. It is up to you what 

you want to do, but we do ask that you keep it under 5 minutes 

as we proceed. 

Bennett Freeman is the Senior Vice President for Social Research and Policy for Calvert Investment. He combines his policy 

experience as a former Deputy Assistant Secretary of State for Democracy, Human Rights, and Labor with an extensive knowledge 

of socially conscious financial planning to help administer private 

asset funds and avoid investments in assets connected with ongoing violence in Darfur. He was with the Clinton administration, I 

believe. 

John Prendergast—there are few Darfur experts more familiar 

with events on the ground, and he is Co-Chair of the ENOUGH 

Project. A frequent traveler to the region, Mr. Prendergast has 

widely published on the Darfur conflict, has led efforts by the 

International Crisis Group to put forward definitive assessments 

and recommendations to addressing the ongoing crisis there. He is 

currently Co-Chair of the ENOUGH Project at the Center for 

American Progress. Welcome, Mr. Prendergast. 

As President of the National Foreign Trade Council, Mr. William 

Reinsch works to represent the interests of the council’s more than 

300 member companies. He oversees the NFTC’s work in favor of 

open markets in support of the Export-Import Bank, the Overseas 

Private Investment Corporation, and many other overseas trade 

and tax issues of concern to U.S. businesses. During the Clinton 

administration, he served as the Under Secretary of Commerce for 

Export Administration. He is also an alumnus of the Senate Banking Committee staff. Nice to see you, Mr. Reinsch. 

Adam Sterling serves as Director of the Sudan Divestment Task 

Force, a project of the Genocide Intervention Network, which works 

to organize nationwide grass-roots campaigns aimed at impledcolon on DSK2BSOYB1PROD with HEARING

31 

mented targeted Sudan divestment campaigns at the local, State, 

and national level. Mr. Sterling has received a number of humanitarian awards, also serves as an adviser on Sudan engagement 

issues to a number of State pension funds. 

I thank all of you for your commitment and your very hard work 

on this very, very, very important social justice issue. 

Senator Reed. 

Senator REED. Well, thank you very much, Senator Brown. I am 

privileged to introduce General Treasurer Frank Caprio for the 

State of Rhode Island. Treasurer Caprio is the eldest child of Joyce 

and Judge Frank Caprio. His father is more famous, in fact, than 

the Treasurer because he is not only a municipal judge, but he has 

his television program in Rhode Island. So tell Judge Caprio we 

said hello. 

His brother, David Caprio, is a State representative, so this is a 

family that is committed to public service in the State of Rhode Island and has been for several generations, and we treasure their 

commitment. 

Frank is just 41, but has accomplished a great deal already. 

After Harvard University where he was captain of the baseball 

team and an All Ivy defensive halfback, he went to Suffolk Law 

School and got his law degree, served in the Rhode Island House 

of Representatives for two terms, then the Rhode Island Senate. 

Throughout his career, he has been committed to advancing the opportunities for Rhode Island citizens, and now as the General 

Treasurer, he has been a leader in the effort to take effective action 

against the regime in Sudan and to do his bit to end the genocide 

there. 

I have valued his friendship and support for many, many years, 

and it is a pleasure, General Treasurer, to have you here today. 

Thank you, Frank. 

Senator BROWN. Mr. Caprio, would you begin? Thank you. 

STATEMENT OF FRANK CAPRIO, GENERAL TREASURER, 

STATE OF RHODE ISLAND 

Mr. CAPRIO. Thank you, Senator Brown. And, Senator Reed, 

thank you for that kind introduction. And also, thank you for the 

invitation to appear here today. 

As stressed by Senator Durbin and Senator Brownback, this 

issue’s time has come. The American people, as we know, are fair 

and caring people, and they have led the way on ending this genocide. The American people know that the children in Darfur, their 

stomachs are full of fear, but their hearts are full of hope—hope 

about the issue that we are talking about today. As an elected official and as an institutional investor of an $8 billion pension fund, I fully recognize my obligations and responsibilities. The management and protection of the funds under my fiduciary responsibility is clear. I am an investor, not a regulator, and 

as such, I hold the right to direct the fund in as accountable a manner as possible. 

I testify before you today not to challenge the Federal Government’s exclusive right to conduct the foreign policy of our Nation, 

but to make the case that not only is the movement of State divestment in concert with our Nation’s policy on Darfur, but it is well 

dcolon on DSK2BSOYB1PROD with HEARING

32 

within the rights of States with fiduciary responsibilities to their 

citizens. Let me elaborate on the latter point. 

State pension funds, as some of the largest, singularly controlled 

pools of assets in our country today, have at their service the 

brightest minds of our financial sectors. We consider market trends 

history, the climate on Wall Street, and countless other variables, 

but, most importantly, we consider risk as we devise our strategy 

for our investments. That strategy is altered as climates change or 

trends develop. Therefore, as prudent investors, we must be able 

to adjust accordingly. 

The growing divestment movement, now including over 20 States 

and a multitude of cities and universities, has been cited by several 

companies as the reason for their decreases in their companies’ 

value and, increasingly, as the reason for their withdrawal from 

the Sudan. 

From a humanitarian perspective, the situation in Darfur is no 

secret, and we have heard recently, with the panel before us, what 

actions the Federal Government has taken and recommends. 

Targeted divestment not only furthers the objectives of our Nation’s foreign policy, but virtually eliminates the States’ risks. This 

approach is directly in keeping with current foreign policy on this 

issue. 

For example, included in our recently passed legislation in Rhode 

Island is the statement that no company will be targeted that has 

been explicitly exempted from the U.S. sanctions by the Treasury 

Department. Additionally, targeted divestment includes a provision 

that the bill will sunset when either Congress declares the genocide 

to be over, or when the State Department removes sanctions on the 

Sudanese Government. 

Furthermore, the targeted model protects the States’ financial interests by providing an opt-out clause in which States possess the 

right to cease divestment if it has proven to result in a negative 

impact on their investment returns. 

This legislation in Rhode Island was unanimously passed and 

immediately signed by our Governor. At its very basis, divestment 

from Sudan represents a choice by the State to invest its money 

in concert with the values of its citizens. Accordingly, States possess both the right and the capacity to invest based on social, humanitarian, and financial values, as long as those decisions are 

consistent with prudent investment standards. 

The targeted approach to divestment followed successfully in 

Rhode Island and other States addresses these concerns while upholding rigorous financial standards. When intelligent policy is 

found that addresses a humanitarian crisis while mitigating financial risks, I feel action must be taken. Targeted divestment is such 

a policy, and I am proud to support it. 

On the grounds that I am confident that States have not only the 

fiduciary right but also the responsibility to divest, Federal legislation will end this ambiguity and galvanize the States’ right to act 

on their own as well as in humanity’s best interest. 

In summary, this action ensures that we will not allow genocide 

to occur on our watch, nor will we allow genocide to occur on our 

dollar. 

Senator Brown and Senator Reed, thank you. 

dcolon on DSK2BSOYB1PROD with HEARING

33 

Senator BROWN. Thank you, Mr. Caprio. 

There will be a vote around, we think, 11:30, 11:35, 11:40. We 

will—oh, they have moved it to 11:55. OK, good. We will not be interrupted at least for the opening statements. 

Mr. Freeman. 

STATEMENT OF BENNETT FREEMAN, SENIOR VICE PRESIDENT FOR SOCIAL RESEARCH AND POLICY, CALVERT 

GROUP 

Mr. FREEMAN. Thank you, Senator Brown and Senator Reed and 

Members of the Committee, for the chance to testify on behalf of 

the Calvert Group, a leading family of socially responsible mutual 

funds, which strongly supports the targeted divestment approach. 

Calvert has always operated on the principle that investment can 

be a positive force in the world. Application of our human rights 

criteria ensure that our socially responsible mutual funds have no 

investments in companies that contribute materially to maintaining the Sudanese Government in power. We have sharpened our 

focus on Sudan as the crisis in Darfur has continued and the Sudanese Government has resisted deployment, until very recently, of 

the hybrid U.N. peacekeeping force. 

We have also been struck by the growing and potential further 

impact of the Sudan divestment movement, the most significant to 

have emerged since that directed against apartheid in South Africa. 

That is why, at the beginning of this year, Calvert formed a partnership with the Sudan Divestment Task Force, together with the 

Save Darfur Coalition, to lend analytical and advocacy support to 

these two groups at a time when their work has gained even greater momentum and urgency. Calvert fully supports the approach of 

the task force and the coalition to engage with companies where 

possible, and to divest only when necessary. Targeted divestment 

focuses on a narrow group of companies, mostly in the oil and infrastructure sectors, that contribute disproportionately to the Government of Sudan’s revenue base and in turn help to facilitate its 

actions in Darfur. 

Let me emphasize that we at Calvert undertook a review of the 

task force’s analytical criteria for determining the so-called highest 

offenders for targeted divestment, and we found that criteria to be 

realistic, credible, and consistent. 

As we pursue divestment, particular care, of course, must be 

taken to ensure that the legitimate humanitarian needs of the Sudanese people are not harmed. Essential goods and services must 

continue to flow through the traditional sources that provide aid in 

Sudan. 

With this appropriately sharp focus, the divestment movement 

has already been making a positive impact both in terms of company decisions and the reactions of the Government of Sudan. The 

Canadian oil company Talisman withdrew from Sudan in 2002 in 

the face of divestment pressure; other oil companies have followed. 

The Government of Sudan has indicated time and again in advertisements in The New York Times and other statements its concern 

over the growing divestment movement. 

dcolon on DSK2BSOYB1PROD with HEARING

34 

That pressure increased significantly early this year when two 

major multinational corporations—ABB and Siemens—followed 

shortly thereafter by Rolls Royce, indicated their intention to cease 

operations in the Sudan as the direct result of pressure from the 

targeted disadvantage movement. 

We believe at Calvert that major institutional investors and 

asset managers should review their portfolios to determine whether 

they hold any companies on the targeted divestment list, and if 

they do hold such companies, that they should probe the specific 

nature of these companies’ operations and links to the Government 

of Sudan. They should then judge whether the companies’ continued presence exacerbates the situation in Darfur or instead can be 

focused in ways that might even help mitigate the humanitarian 

crisis. If the companies’ impact cannot be so mitigated, divestment 

then, in our view, may then be appropriate. 

It is important to note that of the 500-plus companies operating 

in Sudan, only 24 are currently targeted for engagement and divestment by the Sudan Divestment Task Force model. The narrow 

focus of the targeted divestment movement’s objectives should allay 

concerns related to the ability of an institutional investment manager to construct a well-diversified portfolio and thus meet fundamental fiduciary responsibility. 

It is worth noting that the targeted approach to divestment is 

uniquely structured to contain clear sunset provisions so that when 

genocide in Darfur ends, so too, does the basis for divestment. 

Let me emphasize that the dynamic interplay of divestment and 

engagement we believe can and will continue to achieve positive results without compromising the fiduciary responsibilities of money 

managers. 

Calvert is under no illusion that divestment alone can end the 

killing and suffering in Darfur. But as apparent diplomatic 

progress is finally being made toward deployment of that hybrid 

peacekeeping force, now is the time to reinforce—not to diminish— 

the pressure on Khartoum, especially given the Sudanese Government’s record of backtracking that Secretary Frazer acknowledges. 

In conclusion, targeted divestment, in our view, is a well-crafted, 

well-timed tool that combines economic with political pressure. It 

enables citizens and governments at the Federal, State, and local 

level, together with corporations and their investors, to make a 

vital and concrete difference. Moreover, it is the right of investors 

to ensure that their investments do not support continuing genocide and do support peace and security in Sudan. 

Investment decisions matter, and what matters most now is 

bringing the conflict and abuses to an end by using all of the tools 

at our disposal to save the people of Darfur. 

Thank you again for the chance to testify. 

Senator BROWN. Thank you, Mr. Freeman. 

Mr. Prendergast. 

STATEMENT OF JOHN PRENDERGAST, CO-CHAIR, ENOUGH 

PROJECT 

Mr. PRENDERGAST. Thanks, Chairman Brown, for the opportunity 

to figure out or to help figure out what ought to be one of the most 

dcolon on DSK2BSOYB1PROD with HEARING

35 

urgent questions of our time: How do we stop the genocide? I would 

like to enter my written statement in the record and divert a bit. 

State and Treasury today argued that more pressure at this time 

will upset the diplomatic process that is ongoing—‘‘delicate,’’ in 

their word—and, in fact, upset the international coalition, meaning 

China. As a former Government official—I also worked with Bennett in the last administration—I understand the imperative of carrying the water of a certain policy up here to the Hill to testify. 

But this set of testimonies we heard on the previous panel I think 

flies in the face of 18 years of empirical evidence in Sudan during 

the life of this regime, the Bashir regime, which demonstrates that 

the only way to move the Khartoum regime—the only way—and to 

move the rebels, I might add, is there not just pressure, because 

that word has been used and bandied about all day today, but escalating pressure. And I think the U.S. Congress has to lead that 

pressure because the executive branch is not willing to do so for a 

host of reasons. 

These executive branch testimonies we heard also ignore the fact 

that China has moved its policy in very constructive ways over the 

last few months, precisely because an international pressure campaign has targeted China’s complicity in the genocide. The worst 

thing we could do now is to let up, because the deadly mistake that 

has been made for Darfur repeatedly during the last 41⁄2 years is 

to do precisely as the administration proposes now—to reduce pressure, to let up. That would ensure the same results we have had 

over the last 41⁄2 years. If Congress backs off now, then we go back 

to the status quo, guaranteed. History will show. 

And I can tell you as a former diplomat also that one of the most 

effective tools that one can have as an executive branch diplomat 

working on a peace process is to have the legislative branch behind 

you threatening and implementing serious measures like the one 

represented in this divestment bill. These measures provide leverage for our negotiators in Tripoli and our efforts to try to get that 

hybrid force on the ground ASAP. And they concentrate the minds 

of those at the negotiating table and those around the negotiating 

table like those officials coming and visiting from Beijing. It sends 

the message that gone are the days that there will be no consequences, as Senator Menenedez was saying in his opening remarks, no consequences for committing genocide and crimes 

against humanity. That indeed will have an impact. 

Finally, a 1-minute history lesson. Four times in 18 years, we 

have managed to be able to change the policies of the Government 

of Sudan. Conveniently, a bipartisan lesson, twice during the Bush 

administration, twice during the Clinton administration. 

First case, terrorism. As Senator Brownback said at the very beginning of his statement, Osama bin Laden lived in Sudan. They 

were a major state sponsor of terror in the 1990’s, and because of 

specific multilateral pressures, escalating pressures against the 

Government of Sudan, they ended their association with these terrorist groups and cut the ties. 

Second case, slave raiding. We all remember in the 1990’s the 

horrific stories of the resumption of the slave trade in Sudan. It 

was because of additional sanctions and additional pressures, particularly through the United Nations Security Council, that the 

dcolon on DSK2BSOYB1PROD with HEARING

36 

Sudan Government changed its policies, stopped aiding the militias 

that were attacking those communities, and the slave raiding 

ended. 

The Bush administration cases are just as compelling. Two years 

ago, the Bush administration helped lead an international effort to 

negotiate a deal between the Government of Sudan and another set 

of rebels in Southern Sudan, as you all know, a war that led to 2 

million deaths. And that was a very interesting case because that 

was part—the pressure was coming primarily from Congress. You 

passed the Sudan Peace Act. You passed some of the most specific 

legislation that said it was very clear that if we do not see an end 

to this war, we are going to get on the side of the rebels. That was 

a dramatic statement, in effect, that went right to Khartoum. And 

they understood it, and they made the deal. That is where Congress can really provide leverage to a peace process. 

And, finally, the final case, which is the most amazing one, and 

I think that Senator Casey did a great job pointing out the inconsistency of the testimonies, is the hybrid itself, this AU/UN force 

that finally the Government of Sudan has accepted to go into 

Sudan, after years of opposing any kind of U.N. involvement, was 

because China began to pressure, quietly—they are not going to get 

on a soapbox and condemn the genocide. They are going to work 

behind the scenes—as they did, because of this international campaign, led in part by the divestment movement. 

It is stunning that they do not see this as a positive. I guess they 

just have to say these things for diplomatic reasons. 

So I would say, I think the lesson is unambiguous, that we ramp 

up pressure now until the objective is met, and the objective is not 

met until the genocide ends. 

Thank you very much. 

Senator BROWN. Thank you, Mr. Prendergast. 

Mr. Reinsch. 

STATEMENT OF WILLIAM A. REINSCH, PRESIDENT, NATIONAL 

FOREIGN TRADE COUNCIL 

Mr. REINSCH. Thank you, Mr. Chairman. Let me say first it is 

a privilege to appear with John Prendergast. I have followed him 

over the years. I read his stuff, and I think he is one of the most 

thoughtful and well-informed analysts of a very difficult problem. 

That does not mean I agree with him on everything, but it is a 

pleasure and a privilege to be here with him. 

I am the President of the National Foreign Trade Council. Along 

with our USA Engage coalition, we support multilateral cooperation and economic, humanitarian, and diplomatic engagement as 

the most effective means of advancing U.S. foreign policy interests 

and American values. We also support multilateral sanctions, and 

where I differ with my colleagues here is the question of unilateral 

versus multilateral action. 

There is no question that the situation in Sudan is tragic, or that 

the United States and the international community must do much 

more to help. We are all horrified by the tragedy that has unfolded 

in Darfur that has been well elaborated on by the witnesses. And 

we certainly respect the motivation of those who want to do something about it. But the challenge for Congress and the administradcolon on DSK2BSOYB1PROD with HEARING

37 

tion is to pursue appropriate means that will actually effect 

change. 

We believe unilateral sanctions are rarely effective in achieving 

U.S. foreign policy goals. The Peterson Institute for International 

Economics has concluded that unilateral U.S. sanctions in place 

from 1970 through 2000 were effective only 19 percent of the time. 

Sanctions also provide a good excuse for the targeted government 

to blame its failures on outside pressures and to rally nationalist 

support for the regime. Additional complications arise when the 

United States attempts to impose sanctions extraterritorially on 

companies established in other countries, particularly our allies. 

Those countries generally oppose such attempts and have enacted 

blocking statutes and other measures to counteract them, as has 

happened in the EU and Canada and Mexico and Norway and elsewhere. It also makes their cooperation with us on a multilateral 

approach much less likely. 

Foreign policy measures by States and local governments are 

even less effective and infinitely more problematic. The Governor 

and legislature of Texas, Illinois, or California are not the competent bodies to implement U.S. foreign policy, and their narrow divestment or procurement sanctions are unlikely to change the behavior of the target country. In addition, it baffles me why Members of Congress would want to take foreign policy out of their 

hand and out of the President’s hands and subcontract it to local 

governments. 

Sanctions by individual States also interfere with the President’s 

ability to conduct foreign policy and impose enormous compliance 

difficulties for companies, as each State and local law is inevitably 

different from the others, creating as many as 50 different foreign 

policies, each with different rules and different lists of sanctioned 

companies. State measures also impose compliance costs on businesses. A company could be on a divestment list in New Jersey but 

not in California, which will put mutual funds in an impossible position, being told to divest to comply with legal requirements in one 

State but having a fiduciary duty in other States not to do so. 

In addition, there are costs to companies and investors in having 

to monitor, research, and comply with the various laws, which may 

differ from Federal policy, as well as having to pay the fees they 

incur when they sell stocks pursuant to a divestment requirement 

and then buy new ones. 

In Illinois, for example, which is the State we are most familiar 

with since we sued them, the combined lists of so-called forbidden 

entities doing business in Sudan named 233 companies. Had it not 

been declared unconstitutional, the law would have affected 581 

vendors of investment products, and a screening of Morningstar’s 

database suggested at the time—which was last year—that over 

900 equity mutual funds owned at least one forbidden entity. 

Now, I understand that Adam’s list is much smaller than that, 

and if the Federal legislation that I assume is going to pass sooner 

or later were confined to Adam’s list, I think it would address 

many of these problems. But the bills as drafted are not, and I 

think that is something that the Committee ought to consider carefully. 

dcolon on DSK2BSOYB1PROD with HEARING

38 

Neither is divestment free for retirees. In addition to transaction 

costs, divestment increases the risk to shareholders by limiting the 

pool of stocks and funds. One consequence of the initial Illinois divestment law, for example, was that many of the small, highly regulated pension funds likely would have had to move out of international mutual funds and into bond funds. At the time that would 

have cut their annual rate of return by almost half. 

Most important, we believe foreign policy sanctions enacted by 

State and local governments are unconstitutional. In 2000, in Crosby v. NFTC the Supreme Court struck down Massachusetts’ Burma 

sanctions on the ground that they violated the Supremacy Clause 

of the Constitution. Now, I have a wonderful quote, but it is in my 

statement, and I do not have time to read it. 

Let me make a couple brief comments about the pending legislation. Most of them are about the House-passed bill, H.R. 180. The 

Senate bill, S. 831, I think has similar deficiencies, although the 

bill is not exactly the same. 

First, I want to commend Adam and the Sudan Divestment Task 

Force for their work in crafting principles governing their divestment efforts. Their ideas have shaped these pieces of legislation for 

the better. Unfortunately, we continue to have problems. 

First, divestment and procurement bans are likely to face challenges at the World Trade Organization by our trading partners, 

who will see their extraterritoriality as a violation of our trade 

commitments. 

Second, the bill fails to limit State divestment measures and thus 

gives the States inappropriate leeway that interferes with the 

President’s ability to conduct foreign policy. Section 4(a) of H.R. 

180 states that it is U.S. policy to support State divestment for entities that appear on ‘‘any list developed by the State or local government for the purpose of divestment from certain persons.’’ That 

raises exactly the problem that I just talked about a few minutes 

ago. 

Third, there are parts of the bill where further clarification is 

needed. For example, in Section 2, using proprietary information to 

develop a public list poses serious transparency issues, as investors 

and targets of the list may not be able to access the data to determine why or how an entity was included, or to find out how it 

might be removed. The very idea of a public list is also problematic 

since it is often difficult to distinguish with certainty actual business conducted and actual dollars transferred to an investment as 

opposed to press conferences held to brag about a memorandum of 

understanding that, in fact, is never acted upon. 

Finally, and of great importance to us, the authorization for 

States to enact procurement bans in Section 9 of H.R. 180 directly 

contradicts the Supreme Court’s decision in the Crosby case. In 

that case, the Court made abundantly clear with respect to a procurement sanction that the Supremacy Clause protects the flexibility required for the Executive to conduct a coherent foreign policy. Divergent State policy sanctions constrain that, and once again 

I have a wonderful quote, which I will defer to my written statement, Mr. Chairman. 

Beyond these specific concerns, let me close with the slippery 

slope problem. If Congress encourages States to act on a particular 

dcolon on DSK2BSOYB1PROD with HEARING

39 

foreign policy issue through this legislation, it will surely tempt 

them to pass similar divestment and procurement legislation affecting other foreign policy issues. For example, we have seen this in 

your own State, Mr. Chairman, in Ohio, which I will get to in a 

minute. The Sudan Divestment Task Force has done an admirable 

job in attempting to establish a targeted divestment model. They 

are making a good-faith attempt to target their efforts specifically 

at Sudan and to avoid divestment in other situations. Theirs is not 

the only effort and genocide in Sudan is not the only cause. There 

are other divestment movements gaining momentum in State legislatures that would target companies doing business in Iran, and 

other countries, including China. And the advocates of each of 

those causes believe that their cause is as important as the cause 

in Sudan. 

What happened in Ohio, Mr. Chairman, as you probably know, 

is that when your legislature took up this issue, there was an 

amendment in committee to add China to the list—a list that included Sudan and Iran. That amendment failed by two votes, but 

I suspect that when the opportunity arises again, it will be presented again, and the outcome might be different. 

And this is my final point, Mr. Chairman. If the Committee, 

nonetheless, decides to act favorably on these bills, it would be better policy if it included a clear statement of policy in the bill which 

would expressly limit the ability of States to impose foreign policy 

sanctions. Congress should take this opportunity to discourage divestment in any circumstances except those specifically authorized 

by the Congress in the pending bill or subsequent legislation. By 

doing so, Congress would preserve the primacy of the Federal Government in making foreign policy and help ensure uniformity in 

State and local government actions. 

We have had the temerity, Mr. Chairman, to provide some language to the Committee staff on that subject, which I hope they 

will consider. 

I do have some other comments about alternatives, but I think 

in the interest of time, I will stop, and thank you very much for 

your generosity. 

Senator BROWN. Thank you, Mr. Reinsch. 

Mr. Sterling. 

STATEMENT OF ADAM STERLING, DIRECTOR, SUDAN 

DIVESTMENT TASK FORCE 

Mr. STERLING. Thank you, Mr. Chairman, Senator Reed. It is an 

honor to testify today on behalf of the Sudan Divestment Task 

Force and Genocide Intervention Network in support of H.R. 180, 

the Darfur Accountability and Divestment Act. As the director of 

the Sudan Divestment Task Force, the organization at the forefront 

of the Sudan divestment movement, I will be addressing the importance of foreign corporate interests, specifically oil companies, in 

Sudan, and how targeted divestment has already proven successful 

in encouraging foreign companies to use their enormous leverage to 

address the crisis in Darfur, and how H.R. 180 will encourage and 

expand these efforts. 

Sudan produces over 500,000 barrels of oil per day and has at 

least 6.4 billion barrels in proven reserves. In 2006, oil provided 

dcolon on DSK2BSOYB1PROD with HEARING

40 

the Sudanese Government with over $6 billion in revenues and accounted for 90 percent of the country’s revenue from exports. The 

extraction of oil requires capital, reserves, and technical expertise, 

and while Khartoum effectively controls Sudan’s reserves, the government relies on foreign companies to translate those reserves 

into revenue. In fact, Sudan’s national oil company, Sudapet, maintains no more than an 8-percent equity share in any of the country’s producing oil blocks, yet the government receives a majority 

of the revenue generated from these oil fields. 

Unfortunately, revenue from Sudan’s oil has not been used for 

debt relief or development. Instead, Khartoum has allocated the 

majority of its revenue for military expenditures. According to a 

former Sudanese finance minister interviewed by the New York 

Times, over 70 percent of the government’s share of oil profits is 

spent on its military. 

The bottom line is that Sudan’s oil industry serves as a financial 

lifeline to Khartoum, and the foreign companies that support this 

industry have massive leverage to engage Khartoum and contribute to a peaceful and sustainable solution in Darfur. Targeted 

divestment, a policy authorized and encouraged by H.R. 180 provides an effective tool to pressure companies to use this leverage 

in an effective, sustainable manner. 

If companies do fail to respond to engagement within a given 

timeframe and divestment does take place, there is evidence to 

show that divestment from this very small set of companies will 

have an extremely minimal impact, if any, on investment returns. 

I point to a historical analysis presented to you and performed by 

the Sudan Divestment Task Force with data from Bloomberg that 

shows that top peer replacements for these companies—and we 

have a selection of the top highest offenders in Sudan—have consistently performed better over time. 

While targeted divestment significantly minimizes any potential 

harm to investment portfolios, the movement has already proven to 

have a tangible impact on targeted companies. La Mancha Resources, a Canadian mining company, and the primary foreign 

player in Sudan’s mineral extraction industry, recently took extraordinary steps in response to the situation in Darfur, even 

though most of its operations take place on the other side of the 

country. After weeks of engagement with the Sudan Divestment 

Task Force, the company publicly committed to refraining from 

new investment in the country until a peacekeeping force consistent with U.N. Security Council Resolution 1769 has been deployed with the full compliance and cooperation of the Sudanese 

Government and to increase its funding of its humanitarian efforts 

in Sudan by contributing specifically to projects in Darfur. Additionally, the company’s president recently met with Sudan’s Minister of Energy and Mining to discuss the situation in Darfur and 

to encourage the government to fully comply with the implementation of the Security Council resolution. With their substantial leverage in the country, corporations have an extraordinary potential 

and responsibility to contribute to a solution in Darfur. La Mancha 

provides a perfect example to demonstrate the power of targeted divestment to generate the pressure necessary for corporations to 

recognize the urgency in Darfur and to act responsible on this. 

dcolon on DSK2BSOYB1PROD with HEARING

41 

Since 2005, 20 States and over 50 universities have adopted 

Sudan divestment policies, and something that I think will encourage Bill, this movement has rapidly begun to spread through Europe and abroad. In fact, in July, the European Parliament unanimously adopted a resolution calling on European Union members 

to support targeted Sudan divestment efforts, something we are beginning to see them follow up on. 

We appreciate the concerns of the administration regarding the 

implications of H.R. 180 on the Government of South Sudan and 

the implementation of U.N. Security Council resolution. And upon 

close consideration of this bill, Assistant Secretaries Frazer and 

Dibble will see that most, if not all, of their concerns have been addressed. H.R. 180 simply ensures that States and municipal entities move forward with divestment in a unified and targeted fashion that is consistent with and complimentary to Federal foreign 

policy. This includes the same carve-outs and protections for South 

Sudan, as well as exemptions for companies authorized by OFAC 

to operate in Sudan. And perhaps most importantly, H.R. 180 ensures that divestment policies for State and local entities all expire 

under the same conditions, benchmarked to Federal actions and 

statements. 

In conclusion, I would just like to point out that the administration’s position has been contradictory on this issue. In fact, in February 2007, while speaking at the University of Denver and when 

asked about the growing Sudan divestment movement, Secretary 

Frazer stated that, and I quote, ‘‘I think it’s a very positive force 

in our republic and internationally.’’ And I would just point out 

that those statements were made in the middle of a 60-day ceasefire during the Khartoum government and the rebels in Darfur. 

Thank you for the time. 

Senator BROWN. Thank you very much, Mr. Sterling. 

Senator Reed will begin the questioning. 

Senator REED. Well, thank you very much, Mr. Chairman. 

Treasurer Caprio, thank you for your testimony. You are looking 

forward now and planning to move forward on this divestiture program, and you are confident that you can make wise judgments 

that will not inhibit and reduce the financial benefit to the funds 

that you are managing, that you can in a fiduciary capacity carry 

this out without doing anything that would jeopardize the funds. 

Is that your position? 

Mr. CAPRIO. Correct, Senator. We are following the scrutinized 

list procedure, as just elaborated by other witnesses. We have a 

targeted list of companies. We advised all our money managers 

that we do not want any investment in any of these companies. We 

have seen companies such as Rolls Royce PLC recently pull out of 

the Sudan, citing humanitarian concerns. Siemens, a multinational 

giant, has also done likewise. 

So it is actions like what is going on in Rhode Island and other 

States and other institutions that are causing these companies that 

had material operations in the Sudan, that were assisting in the 

government carrying out this genocide, that is really bringing 

about the change that we are calling out for. 

Senator REED. Well, thank you. Again, I thank all of you gentlemen for your testimony. 

dcolon on DSK2BSOYB1PROD with HEARING

42 

Mr. Reinsch, I just want to as sort of a fundamental point, if 

Congress passes legislation that would effectively authorize the 

States to conduct these programs, is that your position? Or do you 

see other challenges? 

Mr. REINSCH. Well, we have gotten different views from lawyers 

as to whether or not congressional action doing that would pass 

constitutional muster. We have not found any lawyers that believe 

that it would survive the Foreign Policy Clause of the Constitution. 

We have gotten different views on whether it would—whether Congress can say it is OK to tell the States or the city of Takoma Park 

it is OK to preempt us. I mean, why you would want to do that 

baffles me, but we do have some lawyers who say that if you do 

that, you know, the Court might respect it. But I do not think that 

you can get over the hump of the Foreign Policy Clause. 

Senator REED. Well, I think others would disagree with you, but 

that is why there are lawyers. Thank you. 

Mr. REINSCH. That is exactly what Senator Baucus told me 3 

weeks ago on a different matter. That is why we have lawyers. 

Senator REED. But I just want it clear that one of the impediments in your view right now is the lack of a Federal statutory preemption or allowing the preemption by States. 

Mr. REINSCH. It certainly makes things worse. One of the things 

that I commented on was that the risk here is that each State may 

do it differently. And as they do it differently, they will have different lists. And from the standpoint of fund managers, it puts 

them in a very difficult position. Federal safe harbor, which is in 

180 also, sort of helps because, otherwise, you are in the awkward 

position of, you know, Mutual Fund X being ordered by the State 

of California to divest, and meanwhile in New Jersey it does not 

have, you know—has not ordered that fund to do the same thing 

because they do not have the same list, and then you have got the 

potential of shareholders in New Jersey suing the fund for having 

divested and lowered their return when, in fact, all this fund is 

doing is complying with California law. So there is an argument for 

uniformity. 

If I may make one more point, though, with respect to the comments from the General Treasurer from Rhode Island, a lot of this 

has to do with how States regulate their pension funds, and what 

we learned—— 

Senator REED. We regulate it very well in Rhode Island. 

Mr. REINSCH. Well, I am sure you do, and I am sure Mr. Caprio 

does. 

Senator REED. Indeed. 

Mr. REINSCH. But what we learned in the case of Illinois was 

that one of the elements of good regulation for prudential reasons, 

not for foreign policy reasons, is that the funds, particularly the 

municipal funds, if there are any, are very strictly regulated in 

where they can invest. And they are often precluded from investing 

in equities directly, and so they buy mutual funds. 

Now, what that means is the way the divestment statute works 

is that the pension fund then has to go to mutual funds that it has 

invested in and ask the mutual fund to certify that none of the mutual fund’s investments are in these companies that are on the list. 

dcolon on DSK2BSOYB1PROD with HEARING

43 

In the State of Illinois, where the statute was in effect for some 

months before the judge threw it out, all but two of the mutual 

funds that the States’ were eligible to invest in in the first place 

for prudential reasons declined to make that certification. Now, in 

most cases it was not because they could not; it was because they 

would not, because it simply was not worthwhile for them to go 

through the work, and because of the way that States statute was 

constructed, it was a moving target. 

What that meant for the pension funds as a practical matter was 

not simply that they had to get out of Siemens, you know, or 

PetroChina. It meant they had to get out of Fidelity Fund. And the 

way they were regulated meant the only thing they could get into 

were bond funds because there were no other mutual funds—— 

Senator REED. I do not mean to cut you off. Time is short. But 

I think you have made a pretty good case for at least some action 

at the Federal level, at least in my view. 

A final point, Senator Brown. Mr. Prendergast, you have made 

a very compelling argument that what moves this regime in Khartoum is pressure, and there are technical constitutional arguments 

about how we should proceed or should we proceed at all. But I 

would suspect that as we move forward, particularly if we can pass 

legislation here, that will give the administration at least the psychological and symbolic clout to keep the pressure on. Is that your 

view, too? 

Mr. PRENDERGAST. Strong view, and I think it is not just moving 

the administration that is crucial. As the Assistant Secretaries 

stated, we need a multilateral pressure. And what is fascinating 

about what divestment does, it gives you a two-fer. It helps U.S. 

policy. It gives the U.S. leverage. But it also puts additional pressure on China. And as they prepared for the Olympics in 2008, as 

they hire people like Steven Spielberg to present a new face to the 

world, it really matters to them that they do not have this noose 

around their neck called Darfur hounding this effort to present this 

new face. 

So it cannot be overstated that while the U.S. Executive branch 

continues to engage the Chinese quietly and privately, to have the 

legislative branch and the disadvantage movement hammering 

away at what the Chinese are doing is a profoundly important consequence to how effective the peace process and the effort to deploy 

the hybrid force will be. 

Senator REED. Thank you very much. 

Senator CASEY. Thank you. We have about 8 minutes before the 

vote, so I will be a little bit late, but I am going to ask a question, 

and then I would like Mr. Prendergast, Mr. Sterling, and Mr. Freeman, all three to weigh in. Please try to keep it to 2 minutes, if 

you can. I hate to cut it short like this. Mr. Prendergast, really in 

follow-up, why don’t you answer first, and then Mr. Sterling and 

Mr. Freeman. 

On especially your comments about ramping up pressure, in recent months there has been a great deal of talk from the administration about a Plan B if the Khartoum regime continues to stonewall U.N. efforts. Talk to me about what Plan B should be, especially in light of the Olympics. Even a paper as conservative on 

China as the Washington Post, their editor wrote an op-ed piece 

dcolon on DSK2BSOYB1PROD with HEARING

44 

yesterday saying we should make the Chinese choose between the 

Olympics and democracy in Burma—an extraordinary thing for 

that paper to say, which has sort of been an apologist for Chinese 

human rights behavior, in my view, in the last decade. 

If you would comment rolling China into each of those, into that 

question, if you would, but what you think Plan B should look like, 

Mr. Prendergast, and then Mr. Freeman and Mr. Sterling. And 

sorry to truncate it like that. 

Mr. PRENDERGAST. That is a very good question. I think first of 

all, the administration at this hearing overstated the impact of 

their unilateral sanctions that the President authorized a few 

months ago. We need to be acting multilaterally. There needs to be 

a very clear cost to either the government or rebel officials if they 

obstruct the deployment of this hybrid or if they undermine this 

peace process. And anyone who does it ought to be sanctioned, but 

not unilaterally, because the Sudanese Government has basically 

discounted our unilateral actions. But we need to work multilaterally with China, France, the U.K., in the United Nations Security 

Council. 

We have four-fifths of the permanent five of the Security Council 

now who are unified in wanting a solution to Darfur. That is unprecedented. Russia is selling arms—they will acquiesce if fourfifths pressure them to do something. So I do not look at them as 

a strategic partner. But we can work very, very closely. 

So Plan B, what gives leverage to the talks and getting hybrid 

out is working through the United Nations Security Council with 

China to push Khartoum to do these things. And the most effective 

way—and I cannot reiterate it enough—is through these continuing 

and ramping-up efforts all over the world, but led by the divestment movement in the United States against Chinese commercial 

complicity in the genocide. And this bill frees the thousand points 

of light that care about this issue in the United States and around 

the world, to continue to ramp up that economic pressure on China. 

And it is a fundamentally important tool in getting the Chinese to 

remain on board with us going forward to get that hybrid force deployed and to get these peace talks concluded in the real peace 

deal. 

Senator CASEY. Thank you. 

Mr. Freeman. 

Mr. FREEMAN. Thank you, Senator. I cannot support more 

strongly the view of my friend and former Clinton administration 

colleague John Prendergast in underscoring the critical importance 

of the pressure that the current divestment movement exerts not 

just on the Government of Sudan directly, but indirectly, but ultimately perhaps more powerfully by exerting pressure on the Government of China. This is so timely, and given the Olympics approaching, this is perhaps the most significant leverage that we 

have. 

I would, though, make a quick broader point, and that is, as Chinese oil companies have expanded their presence, not just in Sudan 

but throughout Sub-Saharan Africa, particularly in the Gulf of 

Guinea region, there has been tremendous scrutiny of their lack of 

commitment to clear international human rights standards. And 

we believe at Calvert that while the primary focus and benefit, of 

dcolon on DSK2BSOYB1PROD with HEARING

45 

course, of the current disadvantage movement should be to help 

end the crisis and killing in Darfur, that this movement might at 

the same time make a longer-term contribution to helping the Chinese Government and oil companies modify their policies and practices in ways that would be consistent with international human 

rights responsibilities. 

So it is a two-fer, to pick up John’s phrase, in terms of the real 

long-term as well as the short-term benefit here on the table. 

Senator CASEY. Thank you. 

Mr. Sterling. 

Mr. STERLING. Yes, I agree with the preceding comments and 

would just add that the Plan B sanctions targeted Sudanese companies, private Sudanese companies with little to no global market 

exposure. So we would encourage focus on foreign companies that 

are actually bringing revenue into Sudan and do have a global 

market exposure, which is exactly what H.R. 180 does. 

Senator CASEY. Thank you. Thanks to all of you. We all know 

what Secretary Powell said 3 years ago, that only action not words 

can win the race against death in Darfur. We appreciate the actions of Mr. Caprio’s State, almost two dozen States around the 

country, and the actions they have taken. This legislation we will 

move in this Committee, I hope soon, and move it on the floor, and 

get it enacted into law. And thank you very, very, very much for 

the work you are doing. 

The Committee is adjourned. Thanks. 

[Whereupon, at 11:58 a.m., the hearing was adjourned.] 

[Prepared statements supplied for the record follow:] 

dcolon on DSK2BSOYB1PROD with HEARING

46 

PREPARED STATEMENT OF SENATOR JACK REED 

Good morning. I want to thank Chairman Dodd and Ranking Member Shelby for 

having this important hearing and welcome our witnesses. 

In 1966, after only a decade of peace, civil war began between the North and 

Southern Sudan and continues to this day, making it the longest running civil war 

in Africa. In the past twenty years, more than 2 million people have died in Southern Sudan because of the war and famine, and millions have been displaced from 

their homes. 

It is a tragedy that has gone on far too long and it is time for the United States 

and the world to focus on the situation. I believe that this nation needs to work with 

the international community in considering all options—diplomatic, economic and 

even military, to stop the violence and suffering in the Sudan. 

Because the United States government has been slow to act, state governments 

have chosen to take matters into their own hands. Nineteen states, including my 

state of Rhode Island, have enacted or proposed legislation addressing the divestment of state funds and other investment from Sudan. We will shortly hear from 

Senators Durbin and Brownback who have introduced legislation authorizing states 

to adopt such measures prohibiting the investment of state assets in the government of Sudan or in any company with a qualifying business relationship with the 

government of Sudan. I am proud to be a cosponsor of this legislation and I look 

forward to working with my colleagues in moving this legislation, and other legislation forward. 

Citizens are also taking action. Shareholder resolutions play an important role in 

addressing critical issues for investors. Consider the issue of Apartheid in South Africa. Throughout the 80’s, resolutions were filed with well over 150 companies by 

investors such as TIAA–CREF, the pension funds of the State of New York and City 

of New York, and scores of religious investors. The resolutions and public debate, 

coupled with the divesting of stock by many universities, pension funds, foundations 

and religious groups, built considerable pressure on companies, which began to 

withdraw from South Africa as long as Apartheid was in effect. Over 150 U.S. companies pulled up stakes and left South Africa; and the companies that stayed began 

to lobby strongly for changes in the system. 

Last year, a shareholder filed a resolution at Berkshire Hathaway that would 

have required the company to divest from PetroChina, one of the corporate supporters of the Khartoum regime. As a result, investors engaged management of 

Berkshire Hathaway in an important discussion about the merits of Sudan divestment during the company’s annual meeting in May of 2007. The Sudan divestment 

resolution filed at Berkshire Hathaway helped to highlight the issue by raising investor, corporate and public awareness. Though the resolution garnered only 3 percent support, Berkshire Hathaway over the months started unloading the Chinese 

oil company stock. 

The SEC is at a critical juncture right now with its proposed rule on shareholder 

access to the proxy. Some of the pending proposals in the rules proposed by the SEC 

could seriously undermine the ability of investors to ask companies to take action 

on critical matters. I know that Chairman Cox is working towards addressing some 

of the uncertainties with proxy access and I hope that the end result will ensure 

investors access and not diminish them in any way. 

Like the war in Iraq, public opinion is well ahead of Congress regarding the crisis 

in Darfur. We need to catch up. I believe this hearing is a critical step in moving 

forward and I look forward to the testimony. Thank you. 

PREPARED STATEMENT OF SENATOR SHERROD BROWN 

Good morning. Thank you all for coming here to participate in this important 

hearing to examine the role of divestment and other tools aimed at stopping the 

genocide in Darfur, Sudan. 

During the past 20 years, Sudan has suffered from a civil war resulting in the 

death or displacement of millions, regional and ethnic strife, and, since 2003, in 

Darfur, 2 million Darfurians have been displaced and as many as 450,000 have perished, at the hands of their own government. In response to this atrocity, we here 

in the U.S. have taken both economic and political action. We put sanctions in place 

initially in 1997, and then subsequently strengthened them several times. We encouraged the UN to implement an arms embargo in Darfur. We have worked with 

the UN and the African Union (AU) to negotiate a peace agreement last year. While 

I applaud these efforts, all of these actions have not yielded the desired result—that 

is, an end to the genocide in Darfur. 

dcolon on DSK2BSOYB1PROD with HEARING

47 

Since the peace deal was signed last year, the situation has actually gotten worse. 

Just last weekend, AU peacekeepers were the victims of a violent raid by rebel 

forces, which left at least 10 peacekeepers dead, several severely injured, and scores 

still missing. News reports indicate that as many as 1,000 soldiers took part in an 

attack on an AU base, and were equipped with armored vehicles and advanced 

weaponry, suggesting they are much more sophisticated than anyone ever expected. 

This violent attack now jeopardizes the implementation of the agreement to bring 

in a larger UN–AU hybrid force in the coming months. It is clear that the current 

strategy is not working. ‘‘Only action, not words, can win the race against death in 

Darfur.’’ Action. Not words. Secretary Powell uttered that statement back in 2004. 

And here we are in the same situation three years later. 

To that end, I commend the efforts of groups like those here today to allow states 

to have the option of being engaged global actors and divest their assets from companies that enable the regime in Khartoum to sustain itself. I thank Senators Durbin, Dodd, and Brownback for their leadership in addressing these issues in the 

Senate. And I commend and my former colleagues in the House, who overwhelmingly passed a bill that: authorizes states to divest from unethical companies doing 

business with Sudan; empowers the American public with information on these companies so they can make their own investment decisions; and prohibits federal tax 

dollars from being used to procure services from companies that do business in 

Sudan. This stands as a bellwether for how we as Americans take action in a 

globalized world, where companies and economies are closely interconnected. This 

concept of targeted divestment of firms—from any country—that are willing to do 

business with the government of Sudan is quite compelling. 

Right now, around 20 states are pursuing initiatives that would divest public pension funds from companies that are willing to work with perpetrators of genocide, 

and I commend them for their initiative. I certainly do not believe it is the prerogative of this Congress in Washington, D.C. to tell teachers, healthcare workers, and 

municipal employees in places like Parma Heights or Columbus, Ohio, where they 

should be investing their precious retirement funds. I hope my colleagues here in 

the Senate follow the lead of the folks in the House and move quickly to allow states 

to decide for themselves what is in their own best interests. Thank you. 

PREPARED STATEMENT OF RICHARD J. DURBIN 

U.S. SENATOR FROM THE STATE OF ILLINOIS

OCTOBER 3, 2007 

Introduction 

Mr. Chairman, I thank the Banking Committee for holding this hearing today on 

a crisis that has gone on far too long, on a crisis that simply must not go on any 

longer. The people of Sudan have suffered drought, famine, genocide, and now utter 

chaos. The United States has talked for years about putting a stop to it. Yet the 

crisis continues. We must act, and we must act now. 

It was over two years ago when President Bush rightly called what was happening in Sudan by its proper name: genocide. Yet the United States and our allies 

have not done enough to help stop it, and Sudan continues to disintegrate. 

The origins of the October peace conference 

At the end of this month, however, there is another chance. We have another 

chance to bring all of the warring factions together to agree on a framework for 

peace in Sudan, a peace that the United Nations peacekeeping force can then help 

secure. The United States should do everything we can to see that this peace is 

agreed to, and then work with the global community to ensure that this peace is 

preserved. 

The latest push for peace gained momentum in late July, when the UN Security 

Council voted to implement a significantly increased United Nations/African Union 

peacekeeping force. 

This peacekeeping force is desperately needed. The United States should work 

with the UN and the global community to make sure it is implemented as soon as 

possible. We in the Senate should do our part by ensuring that adequate funds are 

available to help pay for this critical mission. 

But the peacekeepers are only one important step. Sudan first must have a peace 

to keep, and that requires a long term political agreement among its many factions. 

That is why peace negotiations are so critical. 

UN Secretary General Ban Ki-moon told me in July what he has often said, that 

ending the violence in Darfur is one of his top priorities. In early September his efdcolon on DSK2BSOYB1PROD with HEARING

48 

forts resulted in the announcement of formal peace talks to begin later this month 

between the various factions and the Sudanese government. 

These negotiations will be a critical step and deserve our strongest support. 

Keeping up the pressure by threatening legislation 

What else can we in the Senate do to help? What can we do to reinforce to the 

Sudanese that we are watching very closely and we expect all parties to work towards peace? We can prepare legislation that would increase economic pressure on 

the Sudanese, and be prepared to pass that legislation at any time that the Sudanese might falter on the path to peace. 

That is why today’s hearing is so critical. Our colleagues in the House have done 

their part: they passed the Darfur Accountability and Divestment Act 418–1 in July. 

Today the Senate considers its role. Today this panel will explore legislative options 

that promise economic penalties against those that do not in good faith pursue 

peace through dialogue. In the next couple of weeks we hope to create the best legislation we can and move that bill through committee and onto the Senate calendar. 

The Senate will make it very clear to the Sudanese that we are serious and that 

a bill is ready to pass if they fail. 

What should this bill contain? Concerned members of the House and the Senate, 

as well as the activists who’ve kept this crisis at the forefront of our minds, have 

suggested several means by which economic pressure could be applied, including the 

following: 

• Require the Administration to create a list of companies supporting the Sudanese regime. 

• Require companies supporting the regime to report to the SEC so that the SEC 

can publish a list of these organizations. 

• Require the Administration to report on the impact thus far of current economic 

sanctions. 

• Prohibit federal government contracts from being awarded to companies supporting the regime. 

• Authorize state and local contract prohibitions for companies supporting the regime. 

• Authorize state and local governments to divest from companies supporting the 

regime. 

• Provide investor safe harbors for divestment. 

• Authorize additional funding for the Office of Foreign Assets Control within the 

Treasury Department, so that it can do more to find and punish sanctions violators. 

• Study how the federal employee Thrift Savings Plan could create a Terror-Free 

Investment Fund which would bar Sudan-supporting companies. 

• And finally, increase civil and criminal penalties for sanctions violators, which 

was a proposal that I included in my Sudan Disclosure and Divestment Act and 

which passed the House yesterday as a standalone measure. I’m happy to say 

that this method of increasing economic pressure is already on its way to the 

President for his signature. 

My objective in testifying today is not to advocate for a specific set of pressure 

points, even though I have introduced two bills with Senator Brownback and many 

others that would increase the economic pressure on the Sudanese regime. I think 

we should explore all of these suggestions. My objective here is to provide my full 

support for the Committee’s plan to create the best legislation we can to put maximum pressure on all the factions in Sudan to agree on peace. I look forward to 

working with my colleagues in the Senate—as well as with the House, the advocacy 

groups, and the Administration—to create the best bill that we can and one that 

we can all support. 

Conclusion 

Whatever economic pressure we apply, the purpose needs to be clear: the U.S. 

wants to help bring peace to the region. And we need to apply this pressure with 

one voice. This chamber, this Congress, and this country will not stand by and 

watch as chaos and destruction destroy the people of the Sudan. There is a very 

real opportunity for the peace talks to progress. We urge the Sudanese Government 

and all other parties to bring a halt to the human suffering and participate fully 

in the upcoming peace talks. And we will be ready to enact tough new laws, if necessary, to further isolate the country economically if this opportunity comes and 

goes, with no real change. 

dcolon on DSK2BSOYB1PROD with HEARING

49 

Thank you again for holding this hearing, and I look forward to working with the 

Committee to do our part in bringing peace to the people of Sudan. 

PREPARED STATEMENT OF SAM BROWNBACK 

U.S. SENATOR FROM THE STATE OF KANSAS

OCTOBER 3, 2007 

Since 2003, the government of Sudan has waged a genocidal campaign against the 

people of Darfur. This is the government’s second genocide in the last two decades, 

and the situation worsens each day with innocent men, women, and children being 

slaughtered by government-sponsored militia groups. In just four years, over 

400,000 Darfurian civilians have perished. Moreover, attacks on humanitarian 

workers in Darfur rose 150 percent from June 2006 to June 2007. Dozens of these 

workers were kidnapped, assaulted, and raped; their aid convoys ambushed and hijacked. While rebel groups have also been behind many of these attacks, the primary instigator and facilitator of this genocide is the government of Sudan. 

Over the last four years the unmatched compassion of the American people has 

kept this issue at the forefront of the national conscience. The United States has 

taken the lead internationally in both declaring the atrocities in Darfur a genocide 

and pressuring the government of Sudan to end the violence. Earlier this year, 

President Bush implemented additional sanctions as a way of increasing that pressure despite slow diplomatic progress. I, and many of my colleagues, applauded 

those sanctions as sending a strong signal that the U.S. will pursue even unilateral 

measures as a way to create pressure to end the violence. Of course, we all agree 

that the best way to confront this tragedy is through tough multilateral diplomacy, 

but we cannot remain captive to the slow timetable of the Bashir regime and allied 

countries that prolong the suffering through self-interest and indifference. At the 

same time, the Administration, Congress, and all of us can do more. 

This year the Sudanese economy will likely grow 13%, much of which as a result 

of Chinese, Malaysian, and other foreign corporate investment into Sudan’s extractive resource and power sectors. Despite U.S. sanctions preventing American companies from investing in Sudan and punitive measures targeting Sudanese companies, 

foreign oil investment continues. Such investment provides the means for the regime to carry out its campaign of terror. In short, continued economic growth has 

allowed the regime to act with impunity in Darfur. We must intensify the effort to 

change the economic calculations of the Khartoum regime. 

As the Administration continues the tough work of pushing multilateral diplomacy in the United Nations and through the efforts of Special Envoy Natsios, the 

rest of us must not hesitate to adopt legitimate measures that could have an impact 

on shortening the genocide and saving lives. One such measure is targeted divestment. 

The principle of divestment is simple—that none of our money and the U.S. Government’s money should be invested in the culpable foreign companies that are 

helping to fuel the genocide. The essence of this approach is that while we have 

taken the pledge to the people of Darfur of ‘‘not on our watch,’’ we must also take 

the pledge of ‘‘not on our dime.’’ Since the start of a national divestment campaign, 

States across the country have taken action to ensure that their pension fund dollars are not invested in such companies. I am proud that the State I represent— 

Kansas—is among the States that have already passed legislation to restrict its 

Sudan investments. 

We are already seeing results. Since the targeted Sudan divestment movement 

began, several companies from the UK to Germany to India have suspended or significantly altered their operations in Sudan. And there is good reason to believe the 

Government of Sudan has noticed and is nervous. Clearly, by increasing pressure 

on foreign companies through divestment, the United States can start to change the 

economic calculations of the Sudanese regime. 

Now that the American people and their representatives in State governments 

have begun to act, it is time for the United States Government to do its part. One 

of the key ways for the federal government to help is to explicitly provide authorization for States and local governments to divest from Sudan. Doing so would address 

an objection that has attenuated the success of the targeted divestment movement 

and has seen State divestment statutes stuck down in federal courts. Moreover, 

doing so at the legislative level could help rally the countless individuals—both 

young and old, from all walks of life, and from around the world—who have engaged 

in remarkable acts of individual courage in standing up against the genocide in 

dcolon on DSK2BSOYB1PROD with HEARING

50 

Darfur. As with Apartheid in South Africa, my hope is that these will all add to 

a collective force that will finally bring about change in Darfur. 

Earlier this year, I had the opportunity to testify before the House Financial Services Committee in support of the Darfur Accountability and Divestment Act, one bill 

among several before this committee that have been drafted to allow Congress to 

grant a divestment authorization while still retaining its Constitutional power to 

regulate foreign commerce. While I understand the Executive branch objects a priori 

to the granting of any divestment authority, I urge Administration officials reconsider their position. The legislation is Constitutional and moral; practical and powerful; limited yet effective. 

As members of Congress, we have worked to ensure that the United States remains at the forefront of this fight. It is time again for the United States to show 

leadership on Darfur. We have a responsibility to ensure that genocide does not continue on our watch or on our dime. 

dcolon on DSK2BSOYB1PROD with HEARING

51 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 144 here 50359A.018
52 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 145 here 50359A.019
53 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 146 here 50359A.020
54 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 147 here 50359A.021
55 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 148 here 50359A.022
56 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 149 here 50359A.023
57 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 150 here 50359A.024
58 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 151 here 50359A.025
59 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 152 here 50359A.026
60 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 153 here 50359A.027
61 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 154 here 50359A.028
62 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 155 here 50359A.029
63 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 156 here 50359A.030
64 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 157 here 50359A.031
65 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 158 here 50359A.032
66 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 159 here 50359A.033
67 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 160 here 50359A.034
68 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 161 here 50359A.035
69 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 162 here 50359A.036
70 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 163 here 50359A.037
71 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 164 here 50359A.038
72 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 165 here 50359A.039
73 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 166 here 50359A.040
74 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 167 here 50359A.041
75 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 168 here 50359A.042
76 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 169 here 50359A.043
77 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 170 here 50359A.044
78 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 171 here 50359A.045
79 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 172 here 50359A.046
80 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 173 here 50359A.047
81 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 174 here 50359A.048
82 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 175 here 50359A.049
83 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 176 here 50359A.050
84 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 177 here 50359A.051
85 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 178 here 50359A.052
86 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 179 here 50359A.053
87 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 180 here 50359A.054
88 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 181 here 50359A.055
89 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 182 here 50359A.056
90 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 183 here 50359A.057
91 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 184 here 50359A.058
92 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 185 here 50359A.059
93 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 186 here 50359A.060
94 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 187 here 50359A.061
95 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 188 here 50359A.062
96 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 189 here 50359A.063
97 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 190 here 50359A.064
98 

dcolon on DSK2BSOYB1PROD with HEARING


Insert graphic folio 191/225 here 50359A.065