Panel II of a Hearing of the Senate Banking, Housing and Urban Affairs Committee - Combating Genocide in Darfur: The Role of Divestment

Statement

Panel II of a Hearing of the Senate Banking, Housing and Urban Affairs Committee - Combating Genocide in Darfur: The Role of Divestment and Other Policy Tools

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SEN. JACK REED (D-RI): 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 of Khartoum?

MS. FRAZER: I don't think it was condoned, and I don't think it was encouraged. But it is an interactive process, and I think that I -- there's no justification for the attacks. And some of -- one explanation -- we're 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 Kordofan, the government responded militarily, and that this was then a counterattack with the rebels believing that AMIS was not -- took the side of the government. And so it's a dynamic. And so whereas I don't 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's not excusable.

SEN. REED: So your at least working conclusion is that Khartoum -- it will -- the 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's a divided government. There are those who support UNAMID fully, and then there are those who absolutely oppose it. And so -- and it's a tactically oriented government, and so we have to continue to keep the pressure on the government. That's my experience.

SEN. REED: Well, I think we all sort of share the conclusion. I think the debate here is what kind of pressure, from what direction, et cetera, because, frankly, I think at the heart of the proposal of Senator Durbin and Brownback and others is that this is more pressure continuously applied.

In fact, it's the type of pressure that might get their attention since it's not the carefully calibrated pressure that the administration applies. It's, like, much more blunt. And with all due respect, I mean, "delicacy" and the regime in Khartoum are words I don't assume to hear in the same paragraph. But I know what you're 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 sort of summary?

MR. SZUBIN: Yes, Senator.

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

MR. SZUBIN: Yes, Senator.

SEN. 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.

SEN. REED: Is that clear to -- do you think that's 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's 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 investment with the companies that we've named; they can't 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's a U.S. bank in Europe or in the Far East that comes into the possession of a wire transfer that's going to one of these companies or coming from one of these companies, that money needs to be blocked and frozen.

So, effectively, you have a list of these companies. I mean, some of the discussion today is that we don't want to list publish these companies as the legislation (requires ?), but there is a list of these companies; correct?

MR. SZUBIN: Correct. But if I could, there's, I think, two different lists that have been discussed. We maintain a list of government of Sudan-owned companies where we're targeting at Sudan itself. There's been discussion of, and I think some of the legislation would call for, creating a list of non-Sudanese companies, third-country companies in Europe or elsewhere that are doing business in Sudan, what some people would call a secondary sanction. And that list currently doesn't exist, at least under the government letterhead it doesn't 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.

SEN. REED: Well, and as I think you suggested in one of your previous responses, that most of these Sudanese companies are not listed on any stock market, that there's no ability to invest in them. That's correct, isn't it?

MR. SZUBIN: By and large, the large petrochemical companies that we're talking about are not listed, certainly not in the United States.

SEN. REED: Well, let me ask it another way. That is, are there any companies -- and 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 sanction lists?

MR. SZUBIN: I'm trying to think, and I don't want to answer incorrectly. I don't know of any of these government of Sudan-owned companies. And here we're primarily talking about companies that are operating in Sudan, in Khartoum or in the oilfields, that are traded on -- certainly not on a U.S. exchange, they'd be prohibited from doing that, but I don't know of others that are traded on, say, a European exchange.

SEN. REED: It seems to me that, you know, this is a question of how much is enough, in some respects, which is a -- clearly you and your colleagues are trying to put pressure on the regime. But it would seem to me that, and I don't know -- (inaudible) -- 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 oilfield. And at the heart of what I think our colleagues are trying to get at is trying to cut off that flow of funds, too, which would send a very strong signal to the government in Sudan. But thank you for your efforts.

Thank the chair.

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