Critical Mass: Financial Times Affirms Rise of Capital Markets as Foreign Policy Leverage

(Washington, D.C.): One of the most prestigious financial newspapers in the world reported
today that, with passage last week by the House of Representatives of legislation that would
“effectively de-list from the New York Stock Exchange companies doing business with the
Sudanese regime,” “the financial world has now been put on notice that capital markets sanctions
are a live-wire reality.” The Financial
Times called the vote “a shot across
the bows of the next U.S. administration, which is going to face growing congressional
pressure to restrict access to U.S. capital markets in pursuit of U.S. foreign policy
goals.”

The FT report observes that, were the Sudan Peace Act to become law, it would
have an
immediate effect on the abilities of “Canada’s Talisman Energy, a former British Petroleum
subsidiary that trades about 20 percent of its shares in the U.S., and PetroChina, a subsidiary of
the Chinese state-owned oil company [China National Petroleum Company (CNPC)] that listed
in New York earlier this year.”

It could also affect an Initial Public Offering recently listed in New York by another
Chinese
energy concern, China Petroleum and Chemical Corporation (Sinopec). While Sinopec claims to
have divested its Sudan-related assets this summer by transferring them (at an undisclosed price)
to CNPC, the U.S. Commission on International Religious Freedom has recommended
that
the Securities and Exchange Commission “investigate the accuracy and adequacy of
material disclosures by [Sinopec] in its registration statement, in light of recent media
reports about its holdings in Sudan.”

Rep. Frank Wolf — one of the leading champions of human rights and
national security in the
Congress — noted in a letter to SEC Chairman Arthur Levitt dated 26 October, “the Wall
Street
Journal reported on 11 October that there is evidence that Sinopec’s subsidiary, Zhongyuan
Petroleum Company, continues to do business in Sudan’s oilfields. If this information is
accurate, it would suggest that Sinopec has a material omission in its prospectus.”

Meanwhile on 31 October, Rabbi Irving Greenberg and Jerome
Shestack — the chairman of
the U.S. Holocaust Memorial Council and chairman of the Memorial’s Committee on
Conscience, respectively — announced in an op.ed. article in the Washington Post on
31 October
that the Memorial would beginning on 15 November be hosting a display concerning the horrors
of the genocide underway today in Sudan. Their powerful essay, entitled “Carnage in Sudan,”
declared:

…As bad as the situation already is [in Sudan], it promises to get worse. In late 1999, the
Sudanese government began earning hundreds of millions of dollars from new oil production,
made possible in part by Western oil companies such as Talisman Energy. This hard currency
gives the government both greater means and greater motive to accelerate its assault on targeted
groups. As one Sudanese cabinet minister said, “What prevents us from fighting while we
possess the oil that supports us in this battle even if it lasts for a century?”

Given the appreciation Messrs. Greenberg and Shestack have displayed concerning the
direct
connection between Khartoum regime’s oil revenues and its ability to engage in such genocide
(and slavery, terrorism, the proliferation of weapons of mass destruction, etc.), it is reasonable to
expect that the role the U.S. capital markets are playing in enabling Sudan’s oil development will
be included in this display.