The Financial Times (London), one of the world’s premier financial newspapers, makes clear the danger Talisman Energy faces from the imposition of US capital market sanctions. The US
Congressional action reported on is “fair warning” to Talisman investors; for if capital market sanctions are imposed, there will be a massive collapse of Talisman share price.
The US Congress means business about Sudan: either Talisman exits Sudan or it will face the severest of penalties.
Eric Reeves [November 2, 2000]
Smith College ereeves@smith.edu
Northampton, MA 01063
413-585-3326
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The Financial Times (London), November 2, 2000
US legislators want markets to sway Sudan
By Edward Alden
November 1 2000
The US House of Representatives has quietly passed legislation that aims for the first time to restrict corporate access to US capital markets in order to influence the behaviour of a foreign government.
The House last week approved the Sudan Peace Act, which contains measures that, if enacted, would effectively de-list from the New York Stock Exchange companies doing business with the Sudanese regime.
These include Canada’s Talisman Energy, a former British Petroleum subsidiary that trades about 20 per cent of its shares in the US, and PetroChina, a subsidiary of the Chinese state-owned oil company that listed in New York earlier this year.
Those companies are partners in the development of Sudan’s oil fields. A Canadian government-sponsored investigation earlier this
year said oil revenues were instrumental in sustaining the Khartoum government’s civil war against southern tribes seeking autonomy, which has claimed about 2m lives since 1983.
The House measure will not become law this year, and the Clintron administration has also signalled its opposition to capital markets sanctions. But the vote is a shot across the bows of the next US administration, which is going to face growing congressional pressure to restrict access to US capital markets in pursuit of US
foreign policy goals.
“This is going to be the sanctions wave of the future,” said a congressional aide.
Capital markets sanctions have appeared on a number of pieces of proposed legislation, including a measure defeated this year that would have blocked financing for Chinese companies engaged in weapons proliferation.
Religious and human rights groups also believe that US capital markets may be a critical source of leverage for their campaigns. They pressed many US investment funds not to buy stock in
PetroChina when it raised $2.9bn in a US offering earlier this year.
The US Commission on International Religious Freedom, established by Congress, last week asked the Securities and Exchange Commission to investigate whether another Chinese oil company failed to disclose its involvement in Sudan.
The new pressure paradoxically comes as Congress turns against the use of trade sanctions as a tool of foreign policy, on the grounds that such sanctions often hurt US companies more than foreign countries.
Eric Reeves, a Smith College professor spearheading the campaign to tighten sanctions on Sudan, said that withholding access to US
capital markets would do much less collateral damage to US companies.
With the House passage of the Sudan Peace Act, he said, “The financial world has now been put on notice that capital markets sanctions are a live-wire reality.”