New economic era for Sudan as US lifts sanctions

Sudan’s terror delisting signals the dawning of a new economic era for Khartoum, which could bring its economy back from the brink of economic collapse a year and a half after peaceful protests ousted long-time strongman Omar al Bashir.

US President Donald Trump announced on Monday that Sudan will be removed from a list of state sponsors of terrorism, allowing the country to rejoin the global financial system after nearly three decades as a pariah.

The decision came after Sudan’s government reportedly agreed to pay $335m to the victims of the 1998 bombings of the US embassies in Kenya and Tanzania, which were carried out by al-Qaeda.

“Once deposited, I will lift Sudan from the State Sponsors of Terrorism list. At long last, JUSTICE for the American people and BIG step for Sudan!” President Trump tweeted.

Khartoum transferred  the funds to compensate families of the victims of the attacks, the central bank governor said on Tuesday. 

The move is part of a broader deal which opens the door to international investment and emergency financing from international lenders like the World Bank and IMF.

The deal also holds the promise of a share of US debt relief to Sudan to the tune of $300m including surplus wheat and medical supplies, according to US think-tank on international affairs, the Atlantic Council.

The delisting also paves the way for Sudan’s removal from Washington’s travel ban list, and for the US to hold a trade and investment conference for opportunities in Sudan and send a high-level trade delegation there, led by the Development Finance Corporation, the Atlantic Council says.

At a time when Sudan’s economy is in freefall with inflation exceeding 200 percent, and the Sudanese pound wallowing at 262 against the dollar (down from 82 thirteen months ago), the deal came just in time, says Cameron Hudson, senior fellow at the Atlantic Council’s Africa Center.

“Bread and fuel lines across the capital, Khartoum, are longer today than when President Bashir was in office, and talk among the people stuck in those lines invariably is turning to disgruntlement over the government’s handling of the crisis.”

The breakthrough will also buy the government time to shore up its finances so it can deliver on the promise of “a lasting democracy dividend to Sudan’s long-suffering population,” Hudson says.

The next steps for the Trump administration are a formal notification to Congress as early as this week of its intention to remove Sudan from the terrorism list and immediate high-level engagement with Congress to ensure that it happens, Hudson wrote in a blogpost.

Accessing global capital 

The $335m compensation was a great investment in Sudan’s future that would go a long way in clearing Sudan’s debts under the IMF and World Bank’s Heavily Indebted Poor Countries (HIPC) initiative, said Sudan’s senior advisor to the Ministry of Finance, Magdi Amin.

“One major consequence is that the US can officially support Sudan’s entry into HIPC and arrears clearance. If we demonstrate six months of progress on reforms, this will be next March. With arrears cleared, Sudan regains access to World Bank, the African Development Bank and IMF, [up to] over $1bn [per] year” he tweeted on Monday.

Once the country’s debts are cleared, and progress is made on Sudan’s compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regimes, this will open the door for Sudanese firms to rejoin international financial networks, which will prove crucial for remittances, trade, and investment flows, Cameron says.

“By making arrears clearance a real possibility, removing Sudan from this list should build support for difficult and painful reforms. Beyond debt relief, these reforms are necessary if Sudan is to arrest its economic decline and get to stability, growth, and job creation.”

Seizing the moment

Mohamed Kambal who leads a campaign to lift US technology sanctions from Sudanese companies, urged Sudan’s tech community to waste no time in updating the legal departments of US tech firms in case they missed the memo:

“We should immediately start reaching out to legal departments at American tech companies and update them with the recent delisting step, from our previous collective effort in the issuance of general license D in Feb. 2015, these companies are slow and reluctant,” he wrote on Twitter.

In 2017 the US announced an end to its 20-year-old trade embargo against Sudan but retained the country on its state sponsors of terrorism list. At the time many US companies, banks and corporations were unaware of the policy shift, and assumed that dollar transactions were still prohibited, said African affairs analyst Lauren Blanchard.

The question of peace

While Sudan’s Prime Minister Abdalla Hamdok recently insisted that the normalisation of Sudan’s relations with Israel must not be tied to its long-awaited removal from a US list of state sponsors of terrorism (SST), observers believe a peace agreement will soon follow.

Sudan agreed to normalise ties with Israel after the US gave Khartoum a 24-hour deadline to recognise the Jewish state if it wanted to  be removed from the state sponsors of terrorism list, Saudi-owned pan-Arab newspaper Asharq Al-Awsat reported on Oct. 15.

With Sudan on the cusp of following the UAE and Bahrain in normalising relations with Israel, the question shifts to which of Africa’s Muslim nations will be next to cash in on a lucrative and symbolic peace with Jerusalem.

“Can see Morocco being next on the agenda in return for U.S. and Israel recognising Rabat claims to Western Sahara,” says Ryan Cummings, a senior associate at the CSIS Africa Program in Cape Town.