ABADI NURELDIN ABDELRHMAN
EVEN though it sees them as unjustified, arbitrary, and unfair, the government of Sudan has a moral obligation to never give up actively trying to get US economic sanctions removed; sanctions invariably tend to have a direct proportional relationship with the button of the pyramid. They hurt the poor hardest. Sudan has been no exception.
The unintended consequence of US sanctions on the living standards of ordinary Sudanese has been exceptionally severe. Indeed, a look at a few key representative sectors – finance, transportation, agriculture, and health and information technology – will serve as a succinct survey of the damage to the lives and opportunities to free themselves from poverty of ordinary people in Sudan, wreaked by the US sanctions regime – including the State Sponsor of Terrorism (SST) listing.
FINANCIAL SECTOR
Owing to sanctions on the Sudanese financial sector, millions of ordinary Sudanese families and individuals from the north, south, east and west of the country cannot directly receive the lifeline of private remittances inflows from family members working abroad. This has wreaked havoc on the planning and budgets of millions of households’ unforeseen expenditures. The risk of falling foul of these sanctions also means that all but a slither of the global financial system bans processing any Sudan- destined transactions.
Remittances sent from abroad therefore invariably get to Sudan in two expensive and delay-ridden ways: a) Remittances are routed to the recipient via regional money exchange bureaus; and b) Remittances are paid directly to the recipient by a Sudanese-based middleman, once the sender has deposited the sum in an overseas bank account held by the middleman. Both options incur costly “processing fees” and amount to a regressive income tax imposed by sanctions on remittances destined for ordinary Sudanese and their families, which, in turn, can for example, over time equal the cost of sending – or not – another child to school or obtaining essential medical care to save lives.
Meanwhile, small and medium size business in Sudan – the bedrock of the economy and incubator of job and wealth creation – also find themselves virtually locked out from accessing short-term international trade finance; most global banks (especially those from the west) purposefully shun corporate finance for all Sudanese entities due to burdensome compliance with sanctions and reputational risk stemming from Sudan’s SST designation. Even the handful of private Sudanese firms that can access international trade finance invariably incur a hefty ‘sanctions premium’ on the loan which, in turn, feeds through to ordinary Sudanese consumers in the form of higher costs for goods and services; in other words, yet another de facto regressive income tax is levied on ordinary Sudanese households’ income.
The recent announcement that the United States government is on the cusp of granting and The Office of Foreign Assets Control (OFAC) of the US Department exemption from sanctions to three Sudanese commercial banks is obviously a welcome development. Many global banks (notably Western banks) will even then still continue to shun doing business out of reputational risk concerns for as long as Sudan remains on the SST list. Similarly, the SST designation will also continue to restrict severely , and/or make prohibitively expensive, Sudan’s ability to tap the international political risk and shipping insurance markets’ so there will also remain an acute dearth of long-term project (so-called ‘big-ticket’ projects) that could transform the living standard and opportunities for economic advancement of ordinary Sudanese.
AGRICULTURE SECTOR
Sanctions have also damaged the chief source of livelihood of ordinary people and families, and the agriculture sector. The constraints on large-scale agricultural projects from sanctions on the financial system have already been outlined; but even subsistence farmers and small-scale agricultural co-operatives (the bedrock of agricultural output for domestic consumption) have not escaped unharmed by sanctions.
Like large Sudanese agricultural companies WNSC and KSC, both subsistence farmers and co-operatives have been blocked from accessing (duty-free or otherwise) the US export market – still the most lucrative in the world- under various initiatives targeted to assist the region, like The Africa Growth and Opportunity Act (AGOA). Sanctions have also prevented their access to American-certified seeds (e.g. of the high-yielding and drought or pest-resistant variety. Put starkly, US sanctions have therefore narrowed the escape from poverty for nearly half of Sudan’s working population.
Access to agricultural technical assistance from the US has also been prevented by the sanctions. This has also contributed to low productivity by subsistence farmers’ co-operatives – in other words, poverty escalation – and lack of their awareness of best environmental land management practices; turning that around by freeing the agriculture sector from the sanctions could reduce the chances of intra-communal conflict in Darfur and elsewhere in Sudan in the future.
The author is Minister Plenipotentiary and Deputy Head of Mission at the Embassy of the Republic of Sudan in Zambia
(To be continued tomorrow)