9 October 2017

Sudan: 'U.S. Sanctions Relief Will Not Improve Living Conditions in Sudan' - Economist

Photo: Hannah McNeish/IRIN
Tea seller Achuil Deng now only sells a few cups a day oustide an abandoned Abyei school.

Cairo / Khartoum — Economic expert Prof Hamid Eltigani has contradicted predictions by Sudanese government officials that the US lifting of the trade embargo on Sudan will solve the economic crisis in the country to a large extent. Sudan's FA Minister announced that the second phase of the dialogue with Washington will take place early next year.

According to Prof Eltigani, economist and head of the Department of Public Policy and Administration at the American University in Cairo, the permanent lifting of the trade embargo on Sudan as declared by Washington on Friday, "has mostly a psychological effect.

"The lifting of the sanctions opens the door for Sudan to free trade and investment, but the problem is that Khartoum is bankrupt and has nothing to sell," he commented in an interview with Radio Dabanga broadcast today.

"Almost all industries have become inoperable in Sudan, as their structures have collapsed," he explained. "Most of the productive forces migrated to urban areas and are trying to survive by doing marginal jobs in the informal sector. Others are living in the various camps for the displaced.

"In addition, the country's infrastructure and the education sector that is supposed to provide qualified production cadres have collapsed completely."

Investments

Eltigani does not believe that investors will enter into long-term projects.

"Major US and European companies will refrain from investing in Sudan under these circumstances, especially as Sudan is still on the list of countries that support terrorism. These countries will most probably not invest in Sudan as long as Al Bashir remains in power," he stated.

"Service companies such as McDonald's, Pizza Hut etcetera may enter the Sudanese market but they will not contribute to an increased production."

"Almost all industries have become inoperable in Sudan."

The economist predicted that large national transport institutions such as Sudanair, the railways and sea lines, and the El Gezira Agricultural Scheme "will not return to normal again.

"The collapse of these institutions does not result from the sanctions and the ensuing scarcity of spare parts, as government officials claim, but of fargoing corruption, mismanagement, and a lack of commitment to the services they provide."

He ruled out that the lifting of the sanctions on Friday will stabilise the rate of the Sudanese Pound, but predicted a further rise of the price of the Dollar against the Sudanese Pound at the black market. "The dependence on the import of various basic commodities such as grain or medicine requires hard currency.

"The government is supposed to raise the exchange rate, but instead it is misleading the people with slogans saying the lifting of the sanctions will solve the economic crisis - which of course will not happen."

He further refuted rumours that the lifting of the sanctions represents an opportunity for government officials to smuggle the hard currency they acquired through corruption abroad.

"These allegations are unfounded because the leading members of the current regime and its beneficiaries have secured their money long ago. At least 11 billion Dollars have been put away in Malaysia, the United Arab Emirates and other countries in the Arab Gulf," he said.

Not all sanctions lifted

On Friday, the administration of President Donald Trump lifted two-decades-old economic sanctions on Khartoum "in recognition of the Government of Sudan's sustained positive actions to maintain a cessation of hostilities in conflict areas in Sudan, improve humanitarian access throughout Sudan, and maintain cooperation with the US on addressing regional conflicts and the threat of terrorism".

The US State Department noted that any further normalisation in the bilateral relations with Khartoum requires "continued progress" by the Sudanese government.

"The collapse of these institutions does not result from the sanctions as government officials claim, but of fargoing corruption and mismanagement."

The US decision did not include the removal of Sudan from the list of states sponsoring terrorism -to which it was added in 1993- which means that restrictions on debt relief, receiving foreign aid, or the sale of arms are still in place.

Debts relief

In a press conference in Khartoum on Saturday, Sudan's Minister of Foreign Affairs, Dr Ibrahim Ghandour, announced visits by American high-level officials within the coming weeks "to further develop the partnership between the two countries"

He said that Khartoum agreed with Washington to start "the following dialogue stage early next year. "There are files still pending, including keeping Sudan on the list of state sponsors of terrorism, the external debts problem, and Sudan's accession to the World Trade Organisation."

Finance Minister Mohamed El Rikabi predicted that the effects of the sanctions relief will be gradual. He told reporters in the Sudanese capital on Sunday that the country's external debts consisting of 45 billion Dollars "require high-precision measures to obtain new funding from international institutions.

"Key conditions the International Monetary Fund set for debt relief are the lifting of subsidies on basic commodities and a flexible exchange rate," he said.

"Benefits from funding opportunities facilitated by the US sanctions relief will be guided by a studied plan for the productive sectors and infrastructure."

The State Minister of Finance, Abdelrahman Dirar, said that his Ministry will make use of the positive effects of the sanctions relief by gradually integrating the Sudanese economy into the world economy. The US decision will stabilise the exchange rate of the Sudanese Pound, which will lead to a general decrease of the prices of basic commodities.

"Benefits from remittances and funding opportunities facilitated by the US sanctions relief will be guided by a studied plan for the productive sectors and infrastructure, as well as the establishment and development of assets that support production," he said.

The Director of the Central Bank of Sudan, Hazem Abdelgader, said that a number of foreign banks have requested permission to open branches in Sudan.

He expected the Dollar rates to significantly drop against the Pound during the coming period.

On Sunday, the British Embassy in Khartoum said in a statement that British investment and trade officials arrived in Khartoum that day for talks on investment and trade exchange between the two countries.

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