Sudan Is Open for Business – for Now

KHARTOUM, Sudan – Sudanese President Omar al-Bashir, who is famous for railing against the United States in his speeches, has lately been sounding a more conciliatory tone. When President Donald Trump’s travel ban targeting the citizens of seven Muslim-majority countries, including Sudan, went into effect in January, New Yorkers protesting at John F. Kennedy International Airport had more to say about it than the Sudanese government. It fell to Abdel-Ghani al-Naim, Bashir’s undersecretary of foreign affairs, to object — but not too vigorously and only after underscoring Sudan’s keenness to “continue the dialogue and cooperation with the American side at all levels.”

There was a clear message being telegraphed through this mild response: While Khartoum considers the travel ban an inconvenience, it does not want it to jeopardize the recent progress it has made towards normalizing its relations with the United States. After more than two decades in the cold, the Sudanese government is intent on shedding its pariah status — so the Sudanese students and green card holders stranded at U.S. airports were forced to look to the American Civil Liberties Union for assistance. Khartoum was not about to make a fuss on their behalf.

That’s because prior to Trump’s travel ban, things had been looking up for Bashir, who was indicted for genocide by the International Criminal Court in 2009. In the dying hours of his presidency, Barack Obama signed an executive order partially lifting economic sanctions that had been in place since 1997, when Sudan ran afoul of the United States by hosting Osama bin Laden and other terrorists.

Obama’s executive order lifted restrictions on Sudan’s oil and gas industry, unfroze some Sudanese assets in the United States, and allowed for the import and export of certain approved goods and services. But it came with a six-month probation period during which Sudan must improve access for aid groups, cease the bombing of rebel-held areas in Darfur and the Nuba Mountains, stop supporting rebels in neighboring South Sudan, and cooperate with American intelligence agencies.

In other words, the Trump administration has the ability to put Sudan back in the penalty box if it’s not satisfied with the government’s conduct in any of these areas.

Sanctions relief is certainly welcome news for an economy in distress. In January, Sudan’s Central Bureau of Statistics reported that inflation rose for the eighth consecutive month to 32.86 percent. Sudan’s economy has faltered since the southern half of the country seceded in 2011, taking with it the lion’s share of the oil reserves. Government revenue and foreign exchange income diminished significantly and unexpectedly after that as revenue-sharing agreements with South Sudan collapsed amid political turmoil. This, coupled with lack of access to the international financial system, meant severe hard currency shortages, which the government tried to alleviate by banning some imports and imposing high tariffs on others. In the end, all it did was boost inflation.

Even in the comparatively affluent capital, consumers are buying commodities in daily sachets in order to feed households in meal-sized measurements until their money runs out. The traders in the city’s street markets worry that their goods will rot before they are sold. Apart from a small coterie of political and business elites close to the regime, everyone is hurting.

It’s difficult to say how much of this is attributable to U.S. sanctions and how much is the result of government mismanagement — both have taken their toll on the Sudanese economy. But Obama’s Jan. 13 executive order is expected to improve the outlook for sectors like manufacturing, agriculture, and healthcare, which have been starved of equipment, technology, and investment.

“The effect of sanctions has been devastating on the economy. Banks refuse to deal with Sudanese residents and private businesses cannot even make international transfers,” said Amin Sid Ahmed, a financial consultant and economist who has written extensively on the sanctions regime. “How then are you going to purchase basic agricultural inputs for example? How are you going to purchase life saving drugs? The man on the street who has no political affiliation has suffered the most.”

It is for this reason that the business class has welcomed Obama’s executive order, even if ordinary Sudanese greeted it with a shrug, having long ago grown weary of government promises that their economic prospects will ever be improved. But the sanctions relief hasn’t been as dramatic as some had hoped.

“Even since the sanctions were partially lifted, banks have been sluggish to change their regulations,” said Mohamed Abelrahman, the general manager of Newtech Consulting Group, an engineering firm based in Khartoum that has projects in 16 African and Middle Eastern countries.

The $8.9 billion penalty imposed on BNP Paribas for violating sanctions on Sudan, Cuba, and Iran still looms large over the financial industry. Some banks prefer to avoid the risk of operating in Sudan, even if Obama’s executive order makes doing business technically legal.

“Banks are afraid of fines and thus over-comply, refusing to deal with Sudanese businesses even when they have bank accounts abroad,” said Abelrahman.

Trump’s travel ban, an amended version of which was reimposed Monday after a federal judge blocked the government from implementing the original version, does not roll back the sanctions relief offered by Obama. But it does impede the ability of Sudanese to do business in the United States.

“It’s rather difficult to transact legitimate business that is allowed under [Obama’s] executive order of Jan. 13 if even holders of valid visas issued by the U.S. government cannot come to the U.S. to transact the allowed business,” said J. Peter Pham, the director of the Africa Center at the Atlantic Council, adding that the impact of the sanctions relief will depend in part on how Trump’s travel ban is enforced.

Abelrahman says the ban could impede Newtech’s ability to bid on projects that are funded by development finance institutions with headquarters in the United States, since his employees would be unable to attend meetings there. He foresees similar headaches for other Sudanese businesses, whose competitiveness will take a hit.

“Again, it is the citizens that are suffering; the Sudanese government is a sovereign and so can find its ways to move money and people,” he said.

It was not just the economy that suffered under the sanctions regime. Young people chafed under the economic, diplomatic, and cultural isolation imposed on Sudan. Those who could, left the country, contributing to significant brain drain and a general weakening of civil society.

The number of non-immigrant visas issued to Sudanese citizens for business, tourism, and study in the United States has slowly risen since the sanctions were imposed: 5,080 were issued in 2015, compared to 3,362 in 1997.

The travel ban threatens to reduce this number to zero. But instead of fixing the problem of brain drain it is likely to breed disaffection among the elite. Despite Khartoum’s eagerness not to let it derail the lifting of sanctions, the travel ban reinforces the notion that Sudan is a rogue state and impedes full normalization of relations with the United States.

The ban also serves as a reminder that Sudan remains on the State Department’s list of “state sponsors of terrorism,” despite the fact that most U.S. policymakers agree that it no longer deserves to be there. The list, which can only be altered with congressional approval, served as the basis for the travel ban, which targeted seven countries designated either as “state sponsors” or as terrorist “safe havens.” (The amended travel ban excludes Iraq.) As long as Sudan remains on the “state sponsors” list, it will remain a pariah in the eyes of the international community.

In the meantime, life goes on as usual in Sudan, with the populace continuing to plug the gaps left by governmental malpractice and crippling international isolation. Many people can’t even recall what life was like before the sanctions; a whole generation came of age during the embargo.

“We have developed so many survival mechanisms,” said Heba Mohamed, an unemployed junior medical doctor. “It is hard to imagine how things can be different.”

Ty McCormick contributed reporting from Nairobi.

Top image: ASHRAF SHAZLY/AFP/Getty Images