Sudan: Greenspan called on Congress to reject legislation
Greenspan raps bill to limit Sudan financing - Capital markets might flee to London
Calgary Herald, July 25
Sandee Wong
U.S. Federal Reserve chairman Alan Greenspan called on Congress on Tuesday to reject legislation that would ban international oil companies such as Calgary's Talisman Energy Inc. from American capital markets because of their operations in war-ravaged Sudan.
"The clear outcome of such a law would effectively be to move financing from New York to London," Greenspan told members of the Senate banking committee.
Last month, the U.S. House of Representatives voted 422-2 in favour of a bill designed to prevent oil companies from generating revenue for Sudan's military government, which the U.S. has deemed a state sponsor of terrorism.
The legislation included a provision denying foreign oil companies access to U.S. financial markets if they invest in Sudan, an African country mired in a civil war for 18 years.
The U.S. Senate didn't include that provision earlier this month when it passed its own version of legislation condemning Sudan's government and urging increased U.S. humanitarian aid.
While Greenspan called the motive behind capital-markets sanctions "commendable," he said the implications would be "downright harmful.
"I am most concerned that if we move in directions which undermine our financial capacity, we are undermining the potential long-term growth of the American economy," he said.
The proposed bill created a stir on financial markets in June and initially pushed Talisman's share price down more than 20 per cent.
Eric Reeves, a Smith College professor organizing efforts to sanction Sudan, rejected Greenspan's assertion the legislation may hurt the U.S. economy.
The U.S. market is so large, it faces no serious danger of being challenged by other countries, he said.
"Frankfurt is not a rival. London is not a rival. Hong Kong is not a rival. Aggregated, they are not a rival," Reeves said.
Talisman officials declined to comment Tuesday.
However, chief executive Jim Buckee told reporters last month the bill would set a dangerous precedent: "It's a very slippery slope. It's dangerous. It'll send a big chill to all the other foreign investors who potentially want to list in the U.S."
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