Oil money, US pension funds flood to Sudan despite Darfur genocide

By Angela Woodall

WASHINGTON, July 20, 2005 (Sudan Tribune) — Despite its status as a state sponsor of terrorism and the conflict in Darfur that Washington has called genocide that keeps U.S. businesses and most international aid out, Sudan will be awash in revenues: oil money. More surprisingly, Sudan will also be counting on investments from some Americans – those whose pension plans invest in companies active in Sudan, mostly in the oil sector.

An aerial view of the destroyed Seraf village, in west Darfur along the Sudan and Chad border, April 22, 2005. (Reuters).

The investments have raised eyebrows because of fear that profits may be funding the genocide in Darfur by lining the coffers of what has been called Sudan’s “war machine.”

Dozens of U.S. retirement funds invest in companies doing business in Sudan, according a report by the Conflict Securities Advisory Group, a private firm that specializes in terrorism risk research for investors.

The California Public Employees Retirement System, or CalPERS, the nation’s largest public retirement fund, is one of the biggest investors at a total of $7.5 billion, according to the CSAG report.

Close behind is the California State Teachers Retirement System with $5.8 billion. Retirement funds in Florida, Alabama, Michigan, and Kentucky are the next biggest investors, but in dozens of states retirement systems have similar investments.

Sudan’s government keeps control of the political system and its people by reinvesting profits its military and security forces, said John Prendergast, an advisor with the International Crisis Group, a conflict prevention organization that has been especially active in Darfur, in an interview.

Prendergast said the money coming into the country from oil or other investments is going into the country’s “war machine” and coming out the other side in Darfur or in repressing the Sudanese people.

“The government knows to maintain power in a diverse country like Sudan it has to use repression,” he said.

Outraged at U.S. companies doing business with the Sudanese government in spite of the genocide in Darfur, Oregon, New Jersey Illinois are looking at pulling its billions of dollars out of these investments, an action that could send ripples through Wall Street.

Oil is the other major source of revenue in Sudan. Even as the bloody civil war that was being fought over control of oil in the south dragged on killing at least a million civilians, foreign money rolled into Sudan after the country began pumping oil in earnest, around 1998. It helped finance the war and, ultimately, the attacks on Darfur, said Prendergast.

Russia, a G8 member, has an arms-for-oil deal with Khartoum, according to Global Policy Forum, an international policy monitor and advocacy group with ties to the United Nations.

In early 2002, the Russian oil company Slavnest signed a $200 million deal to develop untapped oil fields in central Sudan in exchange for Sudan’s right to manufacture Russian battle tanks, making Moscow a chief source of Sudan’s arms, according to organization.

At the time, GPF said, “The pact will advance Russia’s efforts to assert its political influence throughout Africa while a domestic arms industry will help Sudan diversify its own sources of revenue and aid government forces fighting southern-based rebels.”

Meanwhile, as the civil war began winding down, violence in Darfur, on Sudan’s western border, exploded.

Darfur is not rich in oil, but the northern Khartoum government has been blamed for stirring up ethnic tensions by supporting and arming local Arab militias, mainly the Janjaweed, as they systematically drive black, non-Arab farmers off their land. Khartoum is said to have used the conflict as a way to suppress pressure by the non-Arab Darfurians for more recognition in the government. Last year, Congress and President Bush called the violence genocide.

As the situation in Darfur worsened, China, whose booming economy is driven by oil, became a major investor in the North African nation’s exploding oil industry, which pumped 345,000 barrels of crude per day in 2004, according to the U.S. Energy Administration. Sudan has at least 563 million barrels of underground crude oil.

Companies from Austria, Canada, Qatar, Malaysia, Sweden, and France also have oil-producing facilities in Sudan, according to the U.S. Agency for International Development (USAID).

On July 9, investors’ prospects brightened when the South and North officially established a power and resource-sharing government after two decades of civil war.
U.S. companies are still not supposed to do business with Sudan because it remains on the State Department list of terror-sponsoring nations.

Rumors flew that this would change after a June 23 visit to Washington by Sudan’s foreign minister, Mustafa Osman Ismail, to meet with the State Department’s number two official, Deputy Secretary Robert Zoellick. That visit followed the arrival several months before of Sudanese intelligence chief Salah Abdallah Gosh, who was invited by the CIA to share information about the war on terrorism, according to news reports.

Allowing Sudanese government officials to visit the United States sends a “wrong message,” said Rep. Donald Payne, D-N.J., at a June 22 hearing of the House committee that oversees international relations.

But, a State Department spokesperson dismissed the rumors, saying that “Reports in the press that the United States has agreed to a timetable for lifting economic sanctions on Sudan and will remove it from the list of countries supporting terrorism are false,” and that the department has not agreed to any such timetable.

” We continue to press the Government of National Unity on the violence and humanitarian crisis in Darfur, ” the spokesperson said, adding that although Sudan has made positive steps in cooperating with the United States in the global war on terrorism, “we have made it clear to Sudan’s leaders that stopping the violence and resolving the conflict in Darfur, as well as continued implementation of the Comprehensive Peace Agreement, is central for any improvement on bilateral relations to be considered.”

Some humanitarian aid is permitted, however, and in the past two years Congress has authorized development aid to Sudan – $120 million, with another $70 million budgeted for 2006. The aid is supposed to go directly to mostly American non-governmental agencies working on the ground in Sudan and not the government.

Aid directed at development will probably pick up since the North-South war ended and the country tries to rebuild a shattered infrastructure, said Salih Booker, executive director of Africa Action, a Washington, D.C.- based advocacy group, in an interview.

Booker was concerned that Washington would prioritize Sudan’s cooperation in the war on terror over the genocide in Darfur. “Sudan is quite sophisticated at manipulating the relationship,” he said.