Sudan: The holy war against Talisman
National Post Editorial, March 30
Peter Foster
Earlier this week the CBC's National carried a two-part documentary on Talisman Energy's operations in Sudan. Flagrantly one-sided, it suggested that Canada's foreign policy had been manipulated by Talisman and Liberal government fans of "unfettered commerce." It concluded with the hysterical suggestion from former UN Ambassador Stephen Lewis that Talisman might one day find itself dragged before a nightmare UN "World Court" for "war crimes."
Sudan has been in the grip of a vicious civil war for almost twenty years. The combatants are the Islamic fundamentalist government based in the north, which has been accused of supporting terrorism, and a number of rebel groups in the south. Calgary-based Talisman is accused of complicity in a number of human rights abuses surrounding the Sudanese operations it took over in 1998. These include: the forcible removal of local populations from oil areas; that the roads and airstrips it helps build make the government's repressions easier; and, most significantly, that oil revenues have enabled the government in Khartoum to escalate its war against the southern rebels.
Talisman's response is that displacement is largely a myth. In fact, it points out, it is involved in many local projects such as bringing fresh drinking water to villages and providing hospitals. Moreover, it claims, development is good, and the government in Khartoum will increasingly realize that faster development can only come with peace.
The southern rebels -- one of whom appeared on the CBC documentary without being identified as such -- are hardly more cuddly than the government in Khartoum. They are, however, a good deal more media savvy and, most important for raising U.S. support, they contain Christian elements (The Sudanese government was conspicuously absent from the National, as were any accounts of rebel atrocities). Sudan is thus seen by many as the opportunity for a new Crusade.
Talisman's arguments in favour of its operations -- while they may be correct -- inevitably smack of hypocrisy, but it is hard to see how the company's withdrawal would in any way help the people of the region. There is little doubt that Talisman has looked at unloading its Sudanese operations, and there are reports that the company has a secret "data room" available to prospective buyers in Calgary. The problem is that U.S. companies are barred from bidding by legislation, while any other Western oil company would be reluctant to take on the NGO aggravation.
Moreover, if Talisman did sell, it would only do so to a company less sensitive to NGO pressure. Talisman's partners, the government oil companies of China and Malaysia, tend to be less amenable to NGO and media manipulation due to the absence in their countries of NGOs and media (Talisman has apparently persuaded them to sign a "code of ethics," which makes such codes appear all the more ridiculous).
Talisman is soon due to release its first Corporate Social Responsibility report. This is hardly likely to appease critics. Those who most vociferously scream about CSR are those who believe the term is an oxymoron. Any CSR report is regarded as a catalogue of hidden guilt (Although companies such as PricewaterhouseCoopers -- which is producing Talisman's report -- tend to be enthusiastic about the exercise).
One significant factor in the renewed furor against Talisman may be that President Bush -- under pressure from Christian fundamentalist groups -- is apparently looking at diplomatic intervention. This could be a blessing in disguise. Any solution that the Bush administration might be able to broker could only be to Talisman's advantage.
The CBC program delivered typical low blows to "happy" Talisman shareholders, who were reportedly growing fat on the misery of others. But while Sudanese exposure has boosted Talisman's oil production, it has arguably damaged its share price. Relative to its earnings -- which last year, like those of all oil companies, were at record levels -- Talisman trades at a discount of around 20% to other Canadian senior producers such as Imperial Oil and Petro-Canada.
There is no way in which Talisman can claim that its presence in Sudan represents an unequivocal good for the country. Nor, however, can it be declared unequivocally bad. Talisman is not I.G.Farben. There is a powerful case for saying that the investment should be left as a matter of conscience for management and shareholders. They may sleep easier at the prospect of a cash flow this year of $20 a share.
Intriguingly, this week two Liberal backbenchers who had been on a fact-finding trip to Sudan -- David Gallaway and Colleen Beaumier -- suggested that David Kilgour, Secretary of State for Africa and Latin America, should resign for suggesting that unloading Talisman stock was laudable. According to Ms. Beaumier, "The demonization of Talisman seems to have become a new national sport." The CBC would just sniff that Ms. Beaumier must be in thrall to "unfettered commerce." Who knows, she may even be a prospective war criminal.
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