The Security Council Should Create Darfur Recovery Fund with Sudanese Oil Revenues
June 1, 2007

Your Excellencies:

We write to strongly urge the United Nations Security Council to take multilateral and decisive action to prevent the unacceptable human rights situation in Darfur from becoming worse and threatening the lives, homes, and security of tens of thousands of more people in Darfur and surrounding areas. The Security Council can and should act on its responsibility to protect civilians in Darfur and eastern Chad by establishing a mandatory "Darfur Recovery Fund" for Sudanese oil revenues under Chapter VII of the UN Charter.  
 
As an effective complement to the application of targeted individual sanctions against top Sudanese leaders responsible for Darfur policy, the Fund would limit the Sudanese government's ability to continue to finance its abusive practices in Darfur. The Fund would therefore increase the prospects for Khartoum's compliance with the Security Council's long-standing demands to end the massive human rights violations in Darfur.  
 
Since 2003, the Sudanese government has committed serious crimes in violation of international law against hundreds of thousands of civilians in Darfur. Two and half million people remain displaced, at least 200,000 have died and the abuses are far from over. Conditions in Darfur are deteriorating as Darfur residents continue to suffer grave human rights violations. Indeed, on May 9, 2007, United Nations Secretary-General Ban Ki-moon expressed deep concern regarding indiscriminate and disproportionate aerial attacks carried out in North Darfur by Sudanese government helicopter gunships and Antonov aircraft in April, which killed and wounded civilians and destroyed property, school buildings, and livestock. The Secretary-General's spokesperson stated that the attacks contributed to an already critical humanitarian situation, causing renewed displacement and spreading terror among the civilian population.  
 
The primary obstacle to ending such attacks and improving the protection of civilians remains the Sudanese government which continues to reject the full deployment of the proposed African Union-United Nations protection force. To date, Khartoum has failed to take any of the measures necessary to improve security for civilians in Darfur, including those demanded by the Security Council in resolutions 1556, 1564, 1591, and 1593. The Sudanese government has consistently reneged on its commitments to disarm the government-backed "Janjaweed" militias and to refrain from offensive military overflights. It continues to target the civilian population by armed attacks and carry out arbitrary arrests and detentions. It has made no genuine effort to end the impunity of Sudanese forces and militias or establish accountability.  
 
Security Council Should Establish Darfur Recovery Fund with Sudanese Oil Revenues  
Under these circumstances, Human Rights Watch calls on the UN Security Council to establish, under Chapter VII of the UN Charter, a mandatory Darfur Recovery Fund into which all revenues from the export of Sudanese oil would be required to be paid directly by the purchasers of that oil. Such limits on Sudan's oil revenues, its major source of government revenue, have the best prospect of bringing a quick end to the violence, compelling the Sudanese government to accept the immediate deployment of the African Union-United Nations force and ending its abusive policies in Darfur.  
 
Under the proposed Fund, both the Sudanese government and private firms could continue to export oil-and Sudan's existing customers could continue to buy it-but all proceeds from such exports and all royalties and similar payments owed to the Sudanese government would be required to be paid directly to the Fund. Human Rights Watch suggests that the Fund be administered by an independent UN-designated financial institution that would serve as escrow agent.  
 
The Fund would distribute such proceeds to: (1) the government of South Sudan in accordance with the requirements and procedures of the Comprehensive Peace Agreement of January 9, 2005; (2) the oil-exporting firms for oil production and delivery; (3) the Sudanese government for those substantiated expenditures on social and humanitarian services that are currently paid for with oil export revenues; and (4) the balance to victim compensation and recovery projects in Sudan, with the goals of facilitating the safe return of displaced persons, assistance in reconstructing homes, and replanting fields and other humanitarian needs both in Darfur and elsewhere in Sudan.  
 
Human Rights Watch proposes that all Darfur Recovery Fund receipts and disbursements be subject to regular independent audits, as would the assistance and recovery projects carried out with Fund assistance, as recommended by the US General Accounting Office report for future UN-authorized trust fund programs. Domestic oil sales (about 15 percent of Sudan's production) would not be affected by or subject to the Fund.  
 
In establishing the Darfur Recovery Fund, it would be important for the Security Council to specify the actions required by the government of Sudan to rescind the mandatory fund procedure. These conditions should include: (1) Sudanese government consent to the full deployment of the African Union-United Nations protection force in Darfur with a mandate to take all necessary measures to protect civilians; (2) cessation of further financial and logistical support to the government-backed Janjaweed militias and cooperation with African Union and the United Nations on a genuine plan for their disarmament; (3) an immediate end to attacks on civilians by Sudanese armed forces and Janjaweed militias; (4) cooperation with the International Criminal Court in its investigations of crimes in Darfur and the execution of arrest warrants and transfer of suspects to the Hague; (5) full and unimpeded access to and within Darfur for Sudanese and international humanitarian workers, human rights organizations, and media. At such a time as the Security Council finds that these conditions have been met, the Darfur Recovery Fund would be terminated and any remaining proceeds distributed to qualifying recipients in accordance with the Fund's procedures.  
 
Once approved by the Security Council, the Darfur Recovery Fund would become binding on all UN member states, which would be called upon to assist in its implementation until the Sudanese government agrees to the expanded international force (including its civilian protection mandate and capacity) and the other civilian protection measures described above.  
 
Further information about the Darfur Recovery Fund is contained in the attached Question and Answer Annex.  
 
In addition to authorizing the establishment of the Darfur Recovery Fund under Chapter VII, Human Rights Watch urges the Security Council to immediately apply the targeted sanctions established under resolution 1591 to senior government officials responsible for Darfur policy. The Security Council should also extend the arms embargo-currently limited to Darfur-throughout Sudan.  
 
Such actions by the Security Council would send a vital signal to both the Sudanese government and civilians in Darfur that the Security Council is united and committed to ending the crimes in violation of international law in Darfur and protecting civilians.  
 
Sincerely,   
Peter Takirambudde  
Executive Director, Africa Division  
 
 
 
ANNEX: Questions and Answers on the Darfur Recovery Fund  
 
1. Question: Will the Darfur Recovery Fund deprive ordinary Sudanese citizens of essential goods and services by diverting oil revenues to the Fund?  
 
Answer: This seems highly unlikely since the Fund will be required to pay over to the Sudanese government that portion of oil export revenues that are demonstrably used now for domestic social services, whether in Darfur or elsewhere. The diversion of that share of oil revenues currently being used by the Sudanese government to fuel its military activities in Darfur (and for a range of personal uses) will have minimal negative effect on ordinary citizens, and the Fund is authorized to spend its money not only on Darfur recovery projects but also on the humanitarian needs of all Sudanese citizens, whether or not in Darfur. Moreover, long-term development in Sudan almost certainly depends on a satisfactory resolution of the Darfur conflict, and the mandatory Darfur Recovery Fund may represent the best current opportunity to achieve that resolution.  
 
2. Question: Isn't the Darfur Recovery Fund just another name for the Iraq Oil-for-Food program, which was said to be both ineffective and rife with corruption?  
 
Answer: While there are some similarities between these two remedies, they are in many respects quite different. The Oil-for-Food program was administered in a way that enabled the Iraqi authorities to extract approximately $229 million in hidden surcharges from the world's oil purchasers through the cooperation of most major countries and a private financial institution that served as both escrow agent for that program and banker for some of its customers who circumvented the program's controls. More significantly, most of the corruption (some $1.53 billion) in the Oil-for-Food program involved kickbacks paid to the Iraqi government by vendors of humanitarian goods and services. In total, these two forms of corruption amounted to $1.8 billion out of the $98.7 billion received and spent by Iraq during the program's seven-year life.  
 
In the case of the Darfur Recovery Fund, all oil proceeds payable to the Fund would be: administered by an independent international financial institution; subject to periodic independent audits of all funds received and expended; and, involve a much smaller group of oil purchasers than the Oil-for-Food program. Even if some portion of the Fund were manipulated into improper Sudanese or other accounts, the Fund's central purpose of preventing the use of Sudan's oil revenues to fuel the government's continuing military activities in Darfur that violate international human rights and humanitarian law would be substantially accomplished.  
 
3. Question: Why wouldn't Sudan simply shut down oil production since it would no longer be enjoying the full benefits of foreign sales?  
 
Answer: This is unlikely for several reasons: the oil-exporting companies will continue to receive production and distribution payments, and, in the government's view, some foreign oil revenue will always be better than no oil revenue to support "normal" governmental operations (and far better than importing fuel for domestic use while denying itself export revenue). In addition, for technical reasons, it is not easy to stop and restart oil production, and doing so can present risks to future pumping efficiency that Sudan is unlikely to want to run.  
 
4. Question: Wouldn't the Darfur Recovery Fund unfairly deprive the Sudanese government of the ability to fight those "non-signatory" rebel forces that rejected the May 2006 Darfur Peace Agreement?  
 
Answer: As a practical matter, the government could achieve increased protection against rebel forces simply by consenting to the deployment of the proposed international force in Darfur. By complying with the remaining conditions specified above for rescinding the Fund, the Sudanese government would recover full access to oil export revenues.  
 
5. Question: Unlike targeted sanctions, this remedy would not deter rebel forces from committing human rights violations. Isn't it therefore too one-sided?  
 
Answer: The Darfur Recovery Fund is not intended to replace targeted individual sanctions against rebel, as well as government and Janjaweed, leaders responsible for human rights violations in Darfur.  
 
6. Question: Wouldn't the Darfur Recovery Fund jeopardize the already fragile peace in Southern Sudan either by undermining the 2005 Comprehensive Peace Agreement or by provoking the Sudanese government leaders to undermine or repudiate the Comprehensive Peace Agreement?  
 
Answer: The Darfur Recovery Fund is intended to strengthen, not undermine, the Comprehensive Peace Agreement (CPA) by providing increased assurance that the government of South Sudan can receive all funds to which it is entitled under, and pursuant to the procedures of, the CPA. (The recent sharp reductions in oil revenues paid to South Sudan by Khartoum further suggest the benefits of such a procedure.) Although the Khartoum leadership might react to the Security Council's establishment of the Darfur Recovery Fund by threatening to undermine the CPA or take other destructive actions, it is unlikely that it would not react similarly if other meaningful measures-such as high-level targeted sanctions-were imposed by the Security Council.  
 
7. Question: Couldn't the Sudanese government contend that, unlike targeted sanctions that punish individuals allegedly linked to human rights violations, the Darfur Recovery Fund punishes an entire country and establishes a precedent for similar actions against other governments that displease "western" interests?  
 
Answer: As noted above, the Darfur Recovery Fund would specifically direct substantial portions of the trust fund to humanitarian projects for civilians both in Darfur and elsewhere in Sudan. While this remedy differs from individual sanctions, it is aimed not at the civilian population but at government institutions participating in gross human rights violations. High-level targeted sanctions, which Human Rights Watch has repeatedly advocated, would also be portrayed by the Sudanese government as a threatening precedent for other countries' leaders who displease the west.  
 
8. Question: Isn't the Darfur Recovery Fund unrealistic because China will never consent to it, either in its role as a permanent member of the Security Council or as Sudan's largest oil purchaser?  
 
Answer: From recent reports, it appears that China may be increasingly concerned by Sudan's continuing refusal to accept the proposed African Union-United Nations force. If China remains opposed to individual sanctions against Sudanese leaders, an economic remedy that permits China to continue to buy Sudanese oil may be acceptable if it helps persuade the Sudanese government to end it abusive policies in Darfur.  
 
9. Question: How would the international community identify oil sales to and from Sudan for the escrow account? Wouldn't it be easy for an oil company to just mingle its payment with its global operations?  
 
Answer: The mechanism would be required to identify Sudanese government accounts used for the deposit of revenue. Under a Security Council mandate, banks and governments could be required to identify and disclose those accounts in order to identify when the proceeds of sales, duties, taxes, or royalties are paid. The mechanism could also identify how much the government is owed by calculating that amount from the contracts the government has with companies. Discrepancies in the amount paid to those accounts and that owed from the contracts could be tracked. This mechanism should capture the bulk of royalties, duties, taxes and other payments owed under contract with the government. Currently, the government of Sudan publishes accounts of oil revenue for both the government and the Government of South Sudan at the Ministry of Finance website (http://www.mof.gov.sd/). If necessary, this mechanism could also identify oil sales of Sudanese crude oil on the international market and require the buyers of that oil to pay into the escrow fund.