home Africa, Congress, Democrats, Economic Sanctions, Middle East, U.S. Politics Congress Approves Sudan Divestment Legislation, Constitutional Issues?

Congress Approves Sudan Divestment Legislation, Constitutional Issues?

As the 110th Congress winds down for 2007, it has approved a set of export control and economic sanctions items that are sprinkled throughout various pieces of legislation.  Yesterday, the Senate approved the Sudan Accountability and Divestment Act that had been approved in the House earlier by a vote of 411-0.

The law provides a legal framework by which States, local governments and certain other investors can divest Sudan-related assets from their portfolios.  It allows States and local governments and private asset fund managers, if they so choose, to adopt measures to facilitate divestment from companies involved in four key business sectors in Sudan.  The federal government will require that all U.S. government contractors certify that they are not involved in business in four key sectors of Sudan’s economy.

The bill’s primary sponsor in the Senate, Sen. Christopher Dodd (D-Conn.), said “Darfur is a humanitarian disaster. More than 450,000 people have been killed and 2 million displaced.  Now is the time to take action and end the suffering of the people of Darfur.”  Dodd told the Associated Press: “I don’t believe President Bush can afford to veto this bill,” said Sen. Chris Dodd, D-Conn., Senate sponsor of the legislation. “A veto would be an endorsement of genocide.”

Interestingly, this is somewhat of a change for Senator Dodd with regards to economic sanctions as he has consistently and forcefully opposed such measures in other countries such as Communist Cuba.  

By way of brief background, the U.S. already has a Sudan sanctions program.  This new proposal, if signed by the President is somewhat significant in that it would give states and local authorities the power to require public and private pension managers to divest investment portfolios of offending investments as a pre-condition of doing business with the state or local authorities.

Several states already have or are in the process of authoring similar measures for State Sponsors of Terrorism and humanitarian crises such as Sudan.  Proponents of such measures argue that pension fund holders should not directly or indirectly send monies to these bad state actors through the purchase of investments that benefit these governments.  Opponents argue that while the purpose is meritorious, state and local governments are meddling in foreign affairs, a power exclusively reserved to the federal government.

States and local governments have long tinkered with “state sanctions.”  These measures are usually aimed at stopping government contractors from doing business with countries that state and local officials have deemed inappropriate such as human rights violators or links to terrorists.  Some of the Constitutional issues involve the foreign commerce clause, federal preemption, and the foreign affairs power of the federal government.   There are federal decisions in each area.

This is not the first and likely not the last divestiture bill Congress will approve.  There are similar proposals under consideration targeted at Iran including a bill in the Senate by Sen. Barack Obama (D-Ill.), Iran Sanctions Enabling Act of 2007, and in the House by Rep. Barney Frank (D-Mass.).  The Frank measure already passed the House.   As is the case with the Dodd bill, here again is an example of two legislators who disapprove of U.S. policy toward Communist Cuba yet are proposing a rather robust sanctions program for other countries.

As a side note, House Foreign Affairs Committee Ranking Member, Rep. Ileana Ros-Lehtinen (R-Fla.) included a divestitute provision in her Iran bill last year but it was removed but offered as a free standing bill this Congress.  With a few exceptions that I will review at a later date, the Obama bill and House approved measure build upon this bill.

The President is expected to sign the Sudan legislation, however, there may be a signing statement that will likely water down the overall impact of the legislation.  I will post an update on this matter as soon as it is available.

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