US businesses challenge Illinois sanctions on Sudan
Aug 7, 2006 (WASHINGTON) — A leading U.S. business group filed a lawsuit in federal court on Monday aimed at striking down sanctions the state of Illinois has imposed on Sudan in response to ongoing violence in Darfur.
The National Foreign Trade Council includes major multinational corporations such as Boeing Co., Caterpillar Inc., Chevron Corp., Exxon Mobil Corp., Microsoft Corp., Ford Motor Co., General Motors Corp. and DaimlerChrysler AG.
Its case targets what the group says is a growing trend among states and local governments passing their own sanctions laws to put additional pressure to change their behavior on foreign governments such as Sudan.
“NFTC supports the efforts of the Bush administration to bring peace to Sudan and to end the brutality that has been occurring in Darfur,” Bill Reinsch, the business group’s president, said in a statement.
“However, state sanctions, like those enacted by the state of Illinois, work at cross purposes with federal policy” and are unconstitutional, he said.
They make it harder for the president to conduct foreign policy and — as is the case with the Illinois law — add a layer of sanctions that often go beyond what the federal government has approved, NFTC officials said.
Tens of thousands of people have been killed and 2.5 million forced from their homes during a three-year campaign of rape, killing and looting in Sudan’s remote, arid Darfur region, creating one of the world’s worst humanitarian crises.
Former President Bill Clinton banned U.S. trade and investment with Sudan in 1997 and Congress codified those sanctions in 2002 as part of the “Sudan Peace Act.”
The Illinois law, which went into effect in January, bars state pension funds from investing in companies and financial institutions whose depositors, borrowers or other business associates have any dealings in Sudan.
Gov. Rod Blagojevich, who signed the Illinois measure into law in June 2005, stands by that decision, a spokeswoman said.
“The governor signed the law because he believes the state should not support governments and regimes that participate in violence against their own citizens,” said Abby Ottenhoff, Blagojevich’s spokeswoman.
The boards of eight local Illinois police and fire public employee pension funds have joined the NFTC in the lawsuit on the grounds that the law forces them to divest international mutual funds and other equities and accept lower yields from other investment options, primarily in the bond market.
The NFTC’s case in Federal District Court for the Northern District of Illinois relies on the precedent set by the U.S. Supreme Court in 2000, when it struck down sanctions imposed by the state of Massachusetts on Myanmar, formerly Burma.
In that case, the court ruled that if the federal government has enacted sanctions on a country, state and local governments are preempted from imposing sanctions of their own, the NFTC said.
Sudan-related investment laws have been enacted in New Jersey, Arizona, Oregon, Louisiana and Connecticut, according to Dan O’Flaherty, a NFTC vice president. Proposals were pending in 18 legislatures, he added.
(Reuters)