5 November 2012

Sudan: Iraq Says Sudan Asked for U.S. $100 Million Aid, Offers $10 Million

Washington — The Sudanese government reached out to Iraq last summer in a bid to obtain financial assistance, an official in Baghdad disclosed today.

The Iraqi government spokesperson Ali al-Dabbagh said in a press release that they received a letter on June 4th from the Sudanese finance minister Ali Mahmood Abdel-Rasool addressed to his Iraqi counterpart asking for aid worth $100 million.

Abdel-Rasool based his request of the Arab League resolution during the summit held in Libya on October 2010 which pledged a $1 billion aid package to support development in Sudan. Arab diplomats at the time expressed skepticism over the funds being actually disbursed due to lack of clarity on the share of each state.

The Iraqi official said that the Sudanese minister outlined the "difficult situation" facing his country after the oil-rich south became an independent state in July 2011 thus denying the north billions of dollar in revenues and negatively impacting the budget and balance of payment. Abdel-Rasool in his letter also referred to the conflict in the war ravaged region of Darfur in western Sudan.

The lost oil accounted for more than 85% of Khartoum's export earnings, which reached $7.5 billion in the first half of 2011, according to the World Bank.

Without its largest source of hard currency, which is needed to pay for imports, inflation has soared and the Sudanese pound has plunged in value to record lows.

But the Iraqi finance ministry in a written opinion said that the country's budget has already been set without any surplus that can be used to fulfill the request.

Furthermore, the ministry said that the supplemental budget was finalized and transmitted to the parliament for approval.

Given the situation the legal department in the Iraqi cabinet recommended placing the matter on the agenda of the council of minister meeting for a final decision.

In its October 30th meeting the Iraqi cabinet agreed to allocate $10 million in aid to Sudan as part of the 2013 draft budget.

The Iraqi government spokesperson said the approval is meant to lend a hand to Arab brothers especially those going through difficult times to alleviate their suffering and help them overcome these circumstances through material and moral support particularly in light of Iraq's current chairmanship of the Arab League.

The disclosure by Iraq highlights the scramble by Khartoum to secure funding to shore up the budget deficit through pleading for help from rich Arab states in light of U.S. sanctions, chilly relations with western nations and lack of access to borrowing venues from international funds.

Sudan dispatched officials to Saudi Arabia, Qatar and Algeria in recent months for that purpose but it is believed that they met little success so far.

In recent weeks a dispute emerged within the ruling National Congress Party (NCP) over Iran ties with the foreign minister Ali Karti pushing the government to downgrade relations with Tehran in favor of stronger links with the oil-rich Arab Gulf states.

Karti cited economic factors as a key reason why Khartoum should make that shift given Arab Gulf states dissatisfaction with the closeness between Sudan and Iran.

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