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January 12, 2000
The Report of the Harker Mission to Sudan: an “a priori analysis”—
The findings of the mission to Sudan and the oil regions, sent by Foreign Minister Lloyd Axworthy and led by John Harker, will be reported out next week, perhaps Tuesday or Wednesday. The report is unlikely to contain a specific recommendation with respect to invoking the Special Economic Measures Act (SEMA) against Talisman and/or Sudan: this will fall to Mr. Axworthy. And if only for political reasons, he will wait for a period of time—perhaps a week or two—to make a decision about sanctions.
The decision may be to invoke the SEMA–or not to invoke it—or to find some politically acceptable “middle ground,” e.g., not announcing sanctions at present but holding out the prospect that they will be imposed “if conditions on the ground in Sudan’s oil regions do not change dramatically in a specified time-frame.” Given how long Sudan has endured massive human suffering and destruction, this effort to find a politically acceptable middle ground seems doomed to failure.
Many in Canada and the US who have followed the situation closely know, from the numerous other reporting sources, just how terrible the situation is in western Upper Nile, the Nuba Mountains, and other distressed regions of the country. And reports in the Canadian press on the consequences of oil development in Sudan go back over a year and a half, when Canadian presence in Sudan’s oil development project took the form of Arakis Energy (acquired by Talisman in summer 1998).
Even prior to the release of the Harker mission report, it has become known that the military aircraft of the Khartoum regime’s armed forces have used Talisman’s airstrip in the oil fields. This is a transparent violation of the supposed “neutrality” of the oil development project. As Madelaine Drohan of the Globe and Mail acutely observed:
“If Talisman allowed the use, which company officials deny, it would be complicit in the long-running civil war in the northeast African country. If the company protested, which is what a Talisman spokesman said it did, the company looks powerless and incapable of doing what chief executive officer Jim Buckee swore they would do — remain above the fray.
“Military use of the company airstrip puts Talisman and the other members of the Greater Nile Oil Project firmly on the government’s side in the Sudanese civil war. You can’t be neutral when one side is using your facilities.” [Globe and Mail, January 7,2000]
More consequential for Mr. Axworthy’s decision is the Harker mission’s discovery of pervasive and compelling evidence of the forced removal of civilian populations from the oil regions. This is especially true given the enormity of Sudan’s refugee problem (with perhaps 5 million refugees and internally displaced people, Sudan’s crisis is the greatest of its kind in the world). The international implications of this exacerbation of the refugee crisis by displacement of people from the oil fields create a tailor-made “trip-wire” for invoking of the SEMA—if there is the political or moral courage to use it.
Less clear is what the Harker mission discovered about the use of oil revenues in Khartoum’s conduct of the war. The mission was not in Khartoum long enough to have ferreted out evidence of the widely known “in kind” trading between Sudan and China (anticipated/realized Sudanese oil production for Chinese weaponry). Whether they had access to useful trade and financial records that would explain just how Khartoum conducts its $1 million (US) a day war is unclear, but highly doubtful.
Also unclear is whether the Harker mission was able to ascertain definitively the uses of the oil refined at the El Obeid refinery (which is directly on the oil pipeline that runs 1000 miles from the south to Port Sudan in the northeast). This 10,000 barrels per day (bpd) refinery now siphons off crude oil from the pipeline built by the consortium of which Talisman Energy is a partner. Since the refined products from El Obeid are not transported any distance from the refinery, the only possible explanation for the consumption is military vehicles and aircraft in the area. The El Obeid refinery has long been perfectly situated to provide forward supplies of refined fuel for military purposes.
More information will make its way out of the foreign ministry in the days leading up to the release of the report. The Foreign Minister may see it as in his political interest to have the contents of the report come out piece-meal, rather than in one explosive—and potentially market-rattling—release. The many people with access to the report, as well as the succession of drafts that the report is going through, make complete confidentiality impossible.
Canadians—in the NGO (nongovernmental organizations) world, in the world of church-based advocacy, and more broadly in the Canadian body politic—have been in a “wait and see” mode for well over a month. Guided by the knowledge that Harker’s mission would be back in late December, and that the report would be issued within a few weeks of that time, Canadians have looked to release of the report and the Foreign Minister’s decision as defining of future political action vis–vis Talisman Energy. The divestment campaign which has roared ahead in the US—with significant sales of Talisman shareholdings to point to, and more in the immediate offing—has yet to receive significant Canadian backing. That could change quickly and dramatically if Axworthy decides not to impose sanctions. And since 75% of Talisman shares are in Canada, the dynamics of the divestment campaign could shift radically.
A further drop in Talisman share price (down over 20% since divestment began in earnest in early September) would bring increased pressure on Talisman to exit Sudan. It remains an open question, however, whether a buyer could be found, inasmuch as acquisition of Talisman’s 25% stake in the Greater Nile Oil Project would come with enormous risks: both in the form of redirected divestment energies, as well as across-the-board consumer boycotts. The French, Swedes, Austrians, and Dutch (all of whose oil companies have been mentioned as possible buyers of Talisman’s stake) are extremely vulnerable to consumer boycotts.
A decision by Canada not to impose sanctions would also further energize American divestment and other political efforts: without the possibility of sanctions derailing Talisman’s participation in the ongoing destruction within Sudan, it will be clear that the only tools available are divestment and political protest against Canadian inaction.
Axworthy will face relentless attack—in the opinion pages, in the form of street drama in Washington, from Sudanese residents in Canada and their allies, and very likely from activists and students on both sides of the border. Sudan’s profile has risen so dramatically because of the reporting on oil development in Sudan (and thus Talisman), that even the great skills of Hill & Knowlton (the high-powered PR firm that Talisman has retained, and which has been extremely active behind the scenes, both in Calgary and Ottawa) will be unable to bottle up the Sudan story.
Ultimately, the divestment campaign will succeed with or without Canadian participation, though it seems reasonable to expect a great increase in such participation if there are no sanctions imposed. Certainly the 25% of Talisman shares that are in the US will come under much increased and more highly visible assault in the upcoming weeks and months. The political and public relations cost of holding Talisman shares will rise to the point where institutional shareholders will be forced to cut their losses. Only the time-table is in question.