What the McDonald's Corporation Can Do to Fight the Darfur Genocide

Cobbled together by the British Empire with little regard to existing ethnic or tribal divisions, the tribes of Sudan’s western Darfur provinces have been historically marginalized and oppressed by the incumbent regime in Khartoum. The intra-Sudanese conflict was exacerbated by Omar Hassan al-Bashir’s Islamic Front movement, which has attempted to forcibly Arabize and Islamicize his subjects. With the aim of local autonomy the mostly Christian and animist rebels of Darfur responded by forming their own militias, particularly the Sudan Liberation Army led by Zaghawa tribesman Minni Minnawi and Hassani al-Turabi’s Justice and Equality Movement, which have waged raids on regional military installations. In order to “pacify” these territories, the junta in Khartoum has recruited the Janjaweed, a horseback-riding militia of the nomadic Arab Bagarra peoples, to pillage the Fur, Zaghawa and Maasalit tribal villages with Chinese-imported machine guns and the cover of Chinese-imported Sudanese military aircraft. The Janjaweed and the Sudanese Army are not just killing civilians of the same ethnicity as Darfurian rebels, but are using such wanton atrocities as systematic rape, torture, hacking off civilians limbs with machetes, and throwing children into bonfires to burn alive. Now going into its fourth year, the Sudanese government’s campaign of genocide against the tribes of Darfur has already killed approximately 400,000 civilians and displaced another 4.7 million.

The man-made disaster in Darfur is steadily growing, and without foreign intervention has only the potential to claim the lives of hundreds of thousands or even millions more innocent civilians. As the traditional world powers dither, a certain business has a unique opportunity to pressure Bashir’s government to end the Darfur genocide. Indeed, the McDonald’s Corporation, as one of the most widespread symbols of American economic might with over 30,000 franchises in over 120 countries, has the opportunity to do what no United States government agency can to exert influence on Khartoum.

Since Sudan is a developing country with few sources of government revenue, the regime in Khartoum is highly dependent upon foreign investment to finance its operations – about 60 percent of all government revenue is allocated towards military expenditures. . The United States has imposed a comprehensive embargo on what it has deemed a state sponsor of terrorism since 1997, and with the Darfur Peace and Accountability Act of 2006 strengthened U.S. sanctions by prohibiting entry at American ports to ships carrying Sudanese oil. Upon issuing the executive order to carry out Congress’ mandate, President Bush determined that whereas “the Government of Sudan continues to implement policies and actions that violate human rights”, and also that “the Government of Sudan has a pervasive role in the petroleum and petrochemical industries in Sudan”, he decreed a prohibition of transactions “relating to the petroleum and petrochemical industries in Sudan.” Since then, the Bush administration has continued to act within its legal authority to tighten the noose around Khartoum’s revenue flow, such as barring more companies controlled by the Sudanese government from the American financial system. Yet given that the United States already has comprehensive sanctions against Sudanese firms, there is little more that it can do with soft power. The notable exception is for Congress to impose secondary sanctions on multinational companies conducting business in Sudan like Sinopec and PetroChina, but the prospect of a United States government issuing de facto sanctions against the People’s Republic of China to which it is indebted more than $1 trillion – and specifically against Chinese oil companies during a period of spiking gas prices – is slim to none.

And so the American private sector may be able to influence Khartoum in ways that the federal government cannot. Though it is not directly involved in any of the events on the ground in Darfur, through its business partnerships the McDonald’s Corporation has a unique opportunity to put economic pressure on the Sudanese regime. And even though McDonald’s is not actually operating within Sudanese territory due to current sanctions, it still has considerable influence over the petroleum economy and state apparatus, namely through its recent agreement with the China Petroleum and Chemical Corporation; also known as Sinopec.

The reason why Sinopec is implicated in the ongoing holocaust is that as the second-largest driller of Sudan’s oil exports, mainland China’s second-largest oil company is all but bankrolling the regime in Khartoum. About half of all Sudanese government revenue is derived from oil exports, and the majority of that revenue is allocated towards military expenditures. Since China imports between 70 and 80 percent of Sudanese oil through semi-privatized firms like Sinopec, the People’s Republic of China acts as Sudan’s patron state. As quid pro quo for petroleum concessions, China is now supplying Khartoum with munitions including T-59 tanks, howitzers, fighter aircraft and landmines which are invariably being used to carry out the atrocities in Darfur. And as the United Nations Security Council debates whether to impose no-fly zones, deploy peacekeeping forces to the Darfur region or even strike Sudan with global sanctions and restrict oil exports through an Oil-for-Food program, Chinese delegates protect their genocidal clients from intervention with veto power.

For these reasons, Sinopec has been among the companies singled out by nearly every investing institution which has adopted a divestment policy towards those firms complicit in the ethnic cleansing of Darfur, including universities such as Harvard and Yale, the cities of Los Angeles, Philadelphia and San Francisco, and eighteen states including California, New York, Texas, Florida and Illinois. Though successful with changing the policy of some firms, shareholder activism has not yet proved to be effectual with Sinopec; this can largely be explained by the fact that an overwhelming majority of 68 percent of all shares in the China Petroleum and Chemical Corporation are owned by the People’s Republic of China. Moreover, the revolving-door culture between government officials and the leadership of private corporations in China’s regime of state capitalism make it very difficult for shareholders of to influence corporate policy. This does not mean that socially responsible investors must give up hope on engaging Sinopec to reform its human rights policies, but merely alternative means must be found to achieve these ends.

Thus McDonald’s enters into the equation. In June, 2006 the McDonald’s Corporation and the China Petroleum and Chemical Corporation signed a 20-year “strategic alliance” agreement to construct McDonald’s Drive-Thru restaurants at some of Sinopec’s more than 30,000 gas stations throughout China. With all the projected additional sales of McDonald’s hamburgers and Sinopec gasoline, it is expected that this lucrative deal is potentially worth multiple billions of dollars for both sides (exact figures have not been released to the public). In addition, according to this contract McDonald’s is given the first right of refusal of co-developed Drive-Thru restaurants at already-existing and newly-constructed Sinopec stations; in other words, since the bulk of the business involved in this partnership will involve McDonald’s resources, employees, etc., they have the final say as to whether each and any of these Drive-Thrus are indeed constructed.

Though tracing the supply chain from McDonald’s to Sinopec to the Government of Sudan to the Janjaweed might at first seem to be too distant to identify any substantive culpability, one does not have to use tortuous logic to see that the more hamburgers McDonald’s sells at its new Chinese Drive Thrus, the more revenue the Sudanese government accumulates through its exports through Sinopec. Indeed, by intertwining its business operations so deeply with Sinopec, the McDonald’s Corporation must assume the political risks that come with having a controversial business partner.

Hence McDonald’s could possibly serve as the “soft underbelly” of the China Petroleum and Chemical Corporation as well as Omar Hassan al-Bashir’s regime in Khartoum, that being if Darfur activists could adopt a strategy of engagement with the McDonald’s Corporation to similarly engage Sinopec. The appeal of using McDonald’s as a vehicle to reforming Sinopec instead of going through Sinopec is that whereas the Chinese oil conglomerate is virtually impenetrable to shareholder activism, McDonald’s is a relatively accessible public corporation. Effecting change with the practices of the McDonald’s Corporation is by comparison much easier. As it is a fully public company with shares owned by such a plethora of diverse investors, no single shareholder or clique of shareholders has the overwhelming power to quash reform. Moreover, the management of McDonald’s has a history of responding to shareholders’ concerns, having ceased the use of polystyrene packaging, asked their major United States supplier of potatoes to stop using genetically-engineered crops, and banned discrimination on the basis of sexual orientation, among other things, as a result of shareholder pressure. Given this track record, there is no reason to think that McDonald’s would be unwilling to adopt some modest measures which would require no change to their production process.

Furthermore, shareholder activists often have had greater successes effecting change in the policies of companies that sell widely-recognized consumer goods in their own markets than those of companies which provide industrial goods and services overseas, because the negative publicity which is accrued by the former can actually have a significant effect on revenues. Sinopec does not sell gasoline in the United States, so they naturally have less reason to be concerned with their image in an irrelevant market. Though McDonald’s, on the other hand, has everything to lose if its image is tarnished in the eyes of American consumers. If anything, there is good reason to believe that since all of the corporate sponsors of the 2008 Beijing Games are already coming under fire for underwriting the “Genocide Olympics”, McDonald’s management could gain much positive PR as a result of distancing itself from Khartoum.

For the McDonald’s Corporation to take action against the Darfur genocide requires neither the 2006 contract with the China Petroleum and Chemical Corporation to be rescinded, nor that any fewer Drive-Thrus must be built. Indeed, corporate engagement does not necessarily entail any losses in productivity. All that McDonald’s needs to do is to vocally express its ethical concerns about Sinopec’s business activities in Sudan and to request that they do any of the following; cease their co-ventures with Sudapet (which as a Sudanese corporation puts McDonald’s in a questionable position of violating the spirit of United States sanctions), reduce their oil extraction activities in Sudan so as to reduce Sudanese government revenue (which is all but unthinkable as Chinese energy demands continue to grow), offset the catastrophic conditions in Darfur by funding or conducting some sort of humanitarian relief program, and what is most important: urge the government of Sudan to halt their campaign of ethnic cleansing. McDonald’s could even take an especially strong stand and freeze construction of new Drive-Thru restaurants until either Sinopec has demonstrated that they have taken constructive steps to engage the Sudanese government or the Darfur genocide has ceased.

No matter how modest McDonald’s measures may be, any action at all that they take could potentially effect change in Sinopec’s policies. In the best-case scenario, the Ralph Alvarez and Wang Tianpu, the respective Presidents of the McDonald’s and China Petroleum and Chemical Corporations, might simultaneously negotiate a plan to engage the Sudanese government as President George W. Bush and Chinese Premier Hu Jintao agree to a join front on diplomacy towards Khartoum. Then the political and economic emissaries of American and Chinese might would have to communicate to the genocidal regime that their patronage is put into a precarious position so long as they are engaged in the systematic annihilation of their own subjects. Of course, for the McDonald’s Corporation to take a stand on Darfur would not necessarily translate into substantive progress on the ground – even if their position is identical to that of the current administration. But as there are no foreseeable costs, there is no economic reason as to why McDonald’s should stand silently as innocent people needlessly perish.