An “Exceptional Case”

In severing its financial ties with PetroChina, a company closely associated with the Sudanese government and its ongoing genocide in Darfur, Harvard’s Corporation Committee on Shareholder Responsibility (CCSR) successfully balanced the need to make a symbolic statement against the genocide with its equally pressing need for freedom in Harvard’s financial dealings. Divestment proponents, led by the United Front for Divestment (UFD), should feel pleased and vindicated by the decision. But their recent calls for further divestment and greater transparency in the dealings of the Harvard Management Company (HMC), which manages the University’s endowment, are misguided and counterproductive.

The case of PetroChina is one where moral concerns clearly override the University’s legitimate desire to avoid having its investment decisions held hostage to a potential slew of causes. PetroChina’s parent company, China National Petroleum Company (CNPC), is a leading partner with the Sudanese government in the country’s production of oil, a major funding source for the government’s sanctioned genocide of the people of Darfur. A 40 percent stakeholder in a major Southern Sudanese oil concession, PetroChina’s parent company is also increasingly difficult to distinguish from PetroChina itself, leaving Petrochina culpable for CNPC’s indirect funding of the Sudanese genocide.

According to pro-divestment activists, Monday’s divestment from PetroChina made Harvard the first institutional investor to carry through on such a move. Though the action is largely symbolic given the University’s relatively small stake in PetroChina, it could set a precedent. Samantha Powers, a lecturer in public policy at the Kennedy School of Government, told The Crimson that although divestment is an “unproven tool” against genocide, Harvard’s decision might “unleash a contagion effect” among other institutions.

Instead of expressing satisfaction with Harvard’s decision, however, many of the most vocal advocates of divestment seem unwilling to leave the spotlight. Manav K. Bhatnagar ’06, co-organizer of the website harvarddivest.org, called Monday’s decision an “incomplete action” until the University sells its very small stake in Sinopec, another Chinese company with ties to Sudan. Matthew W. Mahan ’05, an executive board member of the group Senior Gift Plus, also called on HMC to disclose all of its Sudan-related holdings.

Neither of these actions, if taken, would further the interests of the University nor strengthen its principled position. Sinopec lacks PetroChina’s clear and prominent relationship with the Sudanese government. Sinopec’s primary involvement with Sudan is in the construction of a pipeline from northern to southern Sudan, which will eventually produce revenues to be split between the Khartoum regime and the fledgling government of south Sudan, which recently ceased a two decades-long war against the north. Where PetroChina dealt solely with the Khartoum government, Sinopec’s revenue-sharing agreement was built into the peace agreement ending the civil war. Harvard’s divestment from Sinopec would theoretically hurt both sides, but the relatively poorer South would hurt more. The complications that arise over Sinopec speak to the difficulty of clearly pronouncing companies guilty of complicity with the genocide in Sudan. Continued divestment proponents are right that Harvard has other holdings with ties to Sudan, but they underestimate the complexities involved in assigning blame, complexities that weren’t nearly so bothersome in the case of PetroChina.

Where does one draw the line of culpability? In this era of globally-connected companies, the possibilities for finding “connections,” however tenuous, to the Sudanese government seem almost endless. Divestment proponents argue that full disclosure of Harvard’s Sudan-related investments (outside of those known from Harvard’s Securities and Exchange Commission filings) is necessary to find more “exceptional” cases like PetroChina. But the quest to rid Harvard’s portfolio of all evil is fraught with pitfalls. The opportunity to go over Harvard’s foreign investments with a fine-toothed comb may make continued divestment proponents salivate. And it might yield a few more companies that Harvard should consider divesting from. But it would also reveal Harvard’s positions to other investors, and it would set a dangerous precedent. The HMC cannot feasibly operate with student oversight. Continued divestment proponents should be content with CCSR’s new spirit of scrutiny—as evidenced by its decision to recommend divestment from PetroChina—and trust the Corporation, and the HMC, to police themselves. Lines have to be drawn. Ultimately, the benefits of ridding Harvard of a few more million dollars of questionable stock pale in comparison to the importance of the health of Harvard’s investments. Harvard has set a strong precedent for divesting from exceptionally bad companies. More student interference at this point will likely do more harm than good.

This is not to diminish the triumph of student activists, who likely had a major impact on the CCSR’s decision. In November, then-HMC President Jack R. Meyer said to The Crimson that “divestment is not an effective way to make social change” and argued that such an action would only eliminate jobs for the Sudanese people. It is safe to assume that no such statements will be uttered by anyone at the HMC anytime soon. This culture change among Harvard’s financial managers will ensure that they will think twice before straying into morally grey areas. The precedent Harvard set with its symbolic divestment is the real victory for student activists. Now is not a time for more criticism. It is a time for hope that a morally justified divestment from PetroChina will be more than just the right thing to do. Perhaps in some small way it will ultimately lead to better lives for the people of Darfur.