Divestment in Sudan: A Quandary Quartet
A week ago David Wheeler published an opinion piece in the Globe and Mail in which he argues that it is illogical and even arrogant to call for divestment of Sudan, as have done many activists and scholars, notably Eric Reeves? and Peter Kinder.?
This is an issue particularly interesting to me, as I supported Amherst College’s decision in February 2006 to divest from Sudan.? However, Mr. Wheeler’s arguments stopped me in my tracks, and I’ve since realized a number of other problems with divestment in Sudan: ?
1. Activists are quick to cite apartheid South Africa as an example of effective divestment in the 1980s, and clamor for the same action towards Sudan.? However, the divestment from Africa was implemented worldwide, whereas today, there is little chance that China (also Malaysia and India) will cease buying Sudanese oil and gas; they have in fact vocally announced their intention to prevent the UN from imposing sanctions (requires TimesSelect subscription).?? I suspect that unless divestment is worldwide, the economic result on Sudan’s government will be minimal (See: Cuba).
2. ?Mr. Wheeler cites the number of NGOs working in Sudan to promote small-scale entrepreneurship for economic development.? If divestment actually works and cuts off major investment to Sudan, it would destroy any chance of success for the small enterprises that are the very seeds of social improvement.?
3. There is the ethical problem cited by John Silber, former Pres of Boston University, who says that to divest yourself of ?immoral? stocks, you either sell them?i.e. hand off the guilt to someone else?or destroy them, and help the company by ?reducing the number of stock outstanding.??
4. In South Africa, resistance and divestment were a homegrown movement.? To divest in Sudan?which will increase the hardship of the Sudanese people beyond what they are already enduring?is presumptuous unless they themselves request such world action.?
After considering all these quite convincing arguments, I decide that there is a place for divestment.? #3 is a completely valid paradox, except that China may yet be persuaded out of financial self-interest-to start pressuring Sudan.?? How? The answer is targeted divestment, which addresses #2.? Yes, blindly divesting from all Sudanese companies (or businesses operating there) would indeed hurt SMEs and NGOs, but divestment strategies I’ve seen, say for Amherst College (designed by alum economist Stieglitz) and at Boston University (post-Silber)? specifically target the energy plants providing Sudan’s government with the majority of its revenue; the desired effect of selling stocks is to lower their share value, which ?will cost China billions of dollars in equity value?even as China desperately needs Western capitalization for dozens of its domestic behemoths struggling to compete under the terms of the World Trade Organization that China has committed to.? If this works, and China joins the international community opposing the Darfur regime, the effect of sanctions will be much stronger.?
It’s hard for me to respond to #4, except that I?m not convinced that Sudanese people have the ear of the media enough to request world divestment.?
As always, the NB page is for readers to comment.? Criticize my points at will?the blog forum is yours.