President George W. Bush on 31 December, 2007 signed into law a measure aimed at allowing states, local governments, mutual funds and pension funds to divest from Sudan businesses, particularly its oil sectors.

Sudan has been the focus of a grass-roots divestment campaign because of the conflict in its Darfur region, which has taken some 200,000 lives and displaced some 2.5 million since rebels took up arms against the government in 2003.

Bush has called the deaths genocide, a charge the Sudanese government has rejected.

"My administration will continue its efforts to bring about significant improvements in the conditions in Sudan through sanctions against the government of Sudan and high-level diplomatic engagement and by supporting the deployment of peacekeepers in Darfur," Bush said in a statement.

But he said some provisions of the new law could interfere with his ability to conduct foreign policy and therefore he would "construe and enforce this legislation in a manner that does not conflict with that authority."

Bush signed the law at his Texas ranch where he was spending a weeklong holiday.

Some 20 U.S. states have initiated divestment efforts, but the effort in Illinois was challenged in court.

The new law seeks to provide a legal framework for divestment from companies involved in Sudan's oil industry, mineral extraction, power production, and the production of military equipment.

It also requires the State and Treasury Departments to report to Congress on the effectiveness of sanctions on Sudan. Contractors doing business with the U.S. government will have to certify that they are not involved in those areas as well.

The Save Darfur Coalition says the Sudanese government uses up to 70 percent of its oil revenues, generated mainly through foreign direct investment, to give arms and supplies to the Janjaweed militia accused of the killings in Darfur.

Activists have pressed investors to divest their holdings in companies such as Malaysia's state-owned Petronas, India's Oil and Natural Gas Corp Ltd, and PetroChina Co Ltd, whose parent company, China National Petroleum Corp, is helping Sudan drill for oil.

Reporting by Jeremy Pelofsky, Reuters

www.reuters.com/article/politicsNews/idUSN3156518420071231