Wednesday, February 13, 2008

ONGC and Sudan

Today Steven Spielberg announced he would withdraw as an artistic advisor to the Beijing Olympics and boycott the games due to China’s strong military and economic support of the government of Sudan despite the ongoing atrocities in Darfur. Spielberg’s announcement is of some embarrassment to Beijing which is trying to choreograph a flawless showcasing of its economic and political advancement.

Although most of the western world’s attention I think has rightly been on pressuring China to pressure Sudan over its human rights record in Darfur, it’s interesting to note India’s important involvement in supporting the government of Sudan as well. This is something that hasn’t been covered very much in the Indian media (like a good deal of India’s overseas activity), but I’d be curious to get people’s feedback.

I first came to know about India’s, and specifically ONGC’s, involvement in Sudan through the grassroots divestment campaign in the United States. Universities like Columbia, Yale, and Berkeley have all divested their endowments from ONGC (India’s national oil company) because they feel that ONGC’s investments and operations in Sudan are so morally reprehensible in their implicit support for Khartoum that they no longer want to have any financial connection with the company. Many U.S. states including California, New York, and Texas have followed suit divesting their pension funds from ONGC. The Sudan Divestment Taskforce’s website provides a good overview on who has divested and some of their motivations. Despite these university and state funds being quite large, the divestment campaign has had negligible financial impact on ONGC because it is over 90% owned by the Indian government and only a smaller remaining share is listed on the BSE. Plus, ONGC makes a lot of money in Sudan.

India (through ONGC) is probably either the second or third largest foreign investor in Sudan’s oil sector. ONGC has invested over a billion dollars with stakes in several oil fields. (see ONGC's website here and here) This is important to the Sudanese government’s survival because oil revenue constitutes over half their budget, and more importantly insulates them from having to respond to the needs and grievances of their people more directly (i.e. some variation on the resource curse problem). The Indian government has also actively promoted other Indian multi-nationals to invest in Sudan (especially since other foreign competition is fairly weak in the country due to sanctions from the United States and Europe). To their credit some Indian companies have refused to invest in Sudan. ICSA India Limited, which develops software used in the power sectors, publicly left Sudan recently citing as a reason for leaving the “undesirable policies of [the] Sudanese Government.” The company stated their intent to not pursue future projects in Sudan. I’d be curious if other Indian companies have taken similar stands either in Sudan or elsewhere.

It seems Sudan and issues like it will only grow as India and its companies take on more of a global role. My friends in Bangladesh tell me that people there watch Indian investments by Tata and other companies with great wariness. Many of ONGCs operations are in countries where Western companies have refused to go or cannot go because of political considerations (Iran, Syria, Libya, Burma, etc.). All of this takes place in the context of a race for resources with China across Africa and elsewhere. Burma broke its MOU with ONGC for a natural gas pipeline last year in favor of building a pipeline to China. It should also not be minimized that Western countries and companies have refused to give India and China a share of resources in more politically stable countries where the best resource deposits were locked up through contracts years ago.

Although certainly there will be future competition for resources and all countries including India will have to do business with less than perfect governments, the question is what are the limits? In the United States, laws like the Alien Torts Claims Act and the Foreign Corrupt Practices Act have been used in attempts to check U.S. companies overseas activities in U.S. courts. This approach has had only modest success at best, but has served as at least a minimal check on some of the U.S. companies’ worst abuses. Further, since the U.S. frequently uses sanctions against countries like Sudan or Burma this limits how involved U.S. companies can be involved in some troubled areas of the world. Of course, this approach is debatable and there are still plenty of countries, like Saudi Arabia, that the U.S. freely does business with despite their records.

What course will India take in balancing economic and human rights concerns in its foreign policy? At this point, it looks like it’s not even an issue being debated. Prime Minister Singh recently announced he is for duty-free imports from all of Africa. This could be a great thing for the development of countries in Africa and help alleviate poverty there. Singh though seemed to have announced it only in the hopes of securing oil contracts on the continent. By pledging that the whole continent would receive the same duty-free import favor from the Indian government there was no sense that awards or penalties should be given by the Indian government to countries depending on how they treat their people. Of course, one can argue who is India to sit in judgment of whose governments are doing a good job? Alternatively, one can say who is India to support governments that repress their people? This isn’t easy clear-cut stuff. What I hope to see in the years to come though is a debate about how India wants to approach these issues because there is no neutral position when it comes to trade – you are always supporting someone when choose to trade with them, and that’s a choice.

On a related note, the Chadian government which recently repelled a rebel invasion on its capital (much of this is a result of a spillover affect from fighting in neighboring Sudan) announced it can no longer take refugees from Darfur. In 2011, Southern Sudan will vote if it wants independence (if they do vote, they will likely say yes and re-spark the civil war between the north and south – the country’s principle oil deposits (including ONGC’s) lie between the north and south). Meanwhile, UN troops try to hold the peace in both Darfur and the South. Amongst these troops is a large Indian army presence (who are joined by Chinese engineers). Ironically, the Indian army is only a short flight from ONGC’s oil fields, which keep pumping money into a political and humanitarian crisis that doesn’t seem to go away, and the Indian military has been tasked with controlling through the UN.

Oa bit of a side note, the U.S. law on whether U.S. states can undertake divestment campaigns such as this (that might end up angering the Chinese or Indian government) is still unsettled and a bit of a personal research interest. However, in this case the U.S. federal government passed the Sudan Divestment and Accountability Act in December 2007, which basically endorsed these state divestment actions thereby signaling to the courts that they should not strike down divestment legislation as adversely affecting foreign relations. There has already been an interesting case challenging Illinois divestment legislation (National Foreign Trade Council v. Giannoulia, 2007 U.S. Dist. Lexis 13341 (N.D. Ill. 2007) although it has limited precedent value for a few reasons (including the passage of this act). [I would be interested to hear if there are any cases on Indian states involvement in foreign relations – I know the separate lists in the Indian Constitution describe which spheres of activity the states and central government are respectively in charge of (and foreign relations is central), but now many traditionally local and state activities can have foreign relations implications as U.S. jurisprudence is discovering.]

3 comments:

ravi srinivas said...

I find it useful as it fills gaps in my understanding of the issue.

Another issue is whether genocide is the right word to describe the
killings in Sudan. .Because if one goes by the accepted defintions of genocide this should be classified as one. But in the UN vocublary genocide is a very strong word and is avoided as much as possible in
describing mass killings and
pograms. One can recall the denial of genocide of Armenuans during the rule of the Ottaman Empire
by the present Turkey government.
In 2006 somebody wrote in Outlook
about the silence among Indian muslims on what was happening in
Sudan. The left in India too has kept mum on this issue.

Rajat said...

I'm posting my comments again since I can't find my previous post. So my apologize if this is a mere repetition.

Nick:

I really enjoyed reading your post. I was at the conference in Montreal last year on 'Prevention of Genocide' and it was very interesting to realize how emphasis has shifted from 'law' to other disciplines- perhaps there is not much 'force of law' in preventing genocide(or even later). There was a special panel on role of private sector in preventing genocide and it was good to see how some companies have divested from Sudan. The student group at Harvard- which was particularly involved in this divestment campaign told me that it certainly takes a while to actually persuade these companies to divest from Sudan and most of them did so because of the fear that there public image might be at stake. The divestment campaign threatened to go public and of course internet was very effective means to do the same. I am not aware of any ngo's etc. in India who are actually involved in divestment campaign. Perhaps ,it will be good to convince students in law schools and other institutions to start such campaign.

I recently watched 'Devil came on horseback' and it is a really interesting documentary which of course leaves on question the role of international community in stopping genocide in Sudan. I don't even know why there should a debate on whether it was or not genocide. (I am aware of the fact that if it's genocide, that obligation to protect arise under international law). A new special adviser to the Secretary General on Early stages of genocide has been appointed- which 'might' reflect that change in focus. However, i think private sector may play a role- by divesting from such countries.

Ravi: I don't what is your basis of drawing distinction between 'general genocide' and ' UN definition of genocide'. Denial by someone about genocide doesn't take the fact away that there was indeed genocide.

Rajat

Unnikrishnan R said...

A very informative article. I am especially curious of the involvement of the Indian military in securing these overseas assets the same way the west does it with it's own. I quoted this article in my post about water politics : http://electriksheep.blogspot.com/2008/11/quantum-of-water.html