Divesting from Sudan, Michigan style

Is divestment a strategy to combat genocide in far away places or a tool to fight terrorism?  Is it a matter of homeland security or an assertion of social conscience in a global community?

Michigan’s House and Senate are working on divestment legislation, but differences in approach and philosophy have created conflicting results that need to be reconciled before any legislation can be enacted. One side favors a sweeping anti-terrorism model, the other a focused strategy targeting genocide in Darfur. In spite of their differences, both sides expect to come to agreement and pass legislation in January after the holiday recess.

Some in the Senate support a broad anti-terrorism approach aimed at all countries on the U.S. State Department list of “state sponsors of terrorism.” “We shouldn’t be investing Michigan dollars in countries who intend to hurt us or are our enemies or who import terrorism,” said Sen. Valde Garcia (Rep. Dist. 22) a member of the Homeland Security and Emerging Technologies Committee, which in October took up review of Sen. Cameron Brown’s (Rep. Dist. 16) “Divestment from Terror Act.” That committee met Tuesday to consider changes to several laws that would be affected by Brown’s legislation.

Others prefer a highly specific divestment strategy focusing on a narrow list of companies in a single country.  Legislation sponsored by Rep. Alma Smith (Dem. Dist. 54) follows the targeted divestment approach adopted by 54 universities and 15 states, and is based on the work of the Genocide Intervention Network.  “In contrast to other divestiture legislation, this bill, and this effort to bring an end to the genocide in Darfur, is a about taking a moral and ethical stand on perhaps the greatest humanitarian issue facing the world today,” Smith said. “It is not about politics or social posturing. Simply put, it is about doing the right thing.”

Continued -The state of Michigan has engaged in a divestment campaign once before. From 1979 to 1988 the state passed three acts divesting state funds from South Africa in protest of apartheid, which had divided that country by race since 1948.  Divestment by states, colleges and universities is credited with catalyzing change in South Africa. Michigan ended its South African divestment in 1993, when South African leaders arrived at an agreement to create a Government of National Unity — a bridge to democratic elections. This precedent inspires current efforts to make change in Sudan.

Brown’s legislation seeks to divest from Cuba, North Korea, Syria, Iran, and Sudan — the complete State Department list of “state sponsors of terrorism.”  Brown’s legislative director Kendra Butters says state pension funds and other investments would be examined to determine if their money is invested in “scrutinized companies” — those doing business with any state sponsor of terrorism. Companies would be notified that they have to end their business relationship with the country in question. If they do not, “state dollars will be pulled out and then the fiduciary will have to reinvest in another company.”

Critics of Brown’s legislation say it is so broad that it will have unintended negative consequences on economic, social and political conditions in Sudan. They say it has the potential to drive out businesses that are making a positive difference in the country.

Butters defends the legislation, saying it provides a humanitarian exemption. “We have defined a ‘social development company,’ which exempts products that are helpful to the people — things like agricultural supplies, food, medicine and other consumer products. These things are exempted,” she said.

Smith contends that Sudanese divestment should be a stand-alone bill. Proponents of her bill say this narrow focus ensures positive change in the country, not just the meting out of economic punishment.  The House legislation “only targets companies in Sudan and specific sectors that are deeply problematic. It encourages them to adopt responsible business plans instead of leave the country,” said Scott Wisor, senior field organizer for the Sudan Divestment Task Force.

Another weakness of Brown’s approach, say critics, is that it could be struck down as unconstitutional — a state foray into foreign policy, something forbidden by the U.S. Constitution.  Basing the legislation on a list of countries and implementing a single procedure for those countries puts Michigan’s policy at odds with U.S. State Department foreign policy, which varies by country. “Unless you make sure every component of state legislation is consistent with federal guidance on the issue you run the risk of having an unconstitutional piece of legislation,” Wisor said.

In the past three years many states have initiated divestiture from Sudan. All successfully enacted state divestment legislation has been specific to a single country — Sudan or Iran –  not the entire State Department list. According to the National Conference of State Legislatures only a few states — Georgia, Florida, Missouri, New Jersey, Oklahoma –  have considered divestment legislation based on the State Department list of “state sponsors of terrorism.”

Sen. Hansen Clarke (Dem. Dist. 1), who introduced legislation to divest from Sudan months ago, has another bill incorporated in the Republican anti-terrorism divestment package.  His pragmatic perspective may represent hope for compromise in the coming weeks.  “I don’t think taxpayer dollars should be used to kill innocent people in the Sudan. The Republicans are taking a broader approach, but essentially those bills would do the same thing, so I would support their effort,” Clarke said.

He hopes to help bring forth compromise and expects legislation to be passed in the House and Senate in January. “I believe we’ll have a law to urge the state to divest money from businesses supporting the Sudanese government. I am a Democrat, but I don’t care about the politics on this. I want to send a statement strongly that taxpayers’ money should not fund genocide anywhere around the world,” Clarke said.

(Photo credit: Economist, print edition August 2, 2007)