The lifting of United States sanctions on Sudan is a necessary but not sufficient condition for the country’s economic recovery. To achieve that, President Omar al-Bashir must strike a tricky balance between economic reforms, political openness, internal stability and international goodwill.
In a nutshell
- Sudan’s President Omar al-Bashir faces a financial squeeze ahead of 2020 elections
- Attempts at conciliation have not yet got Sudan off the U.S. terrorist supporters list
- Mr. Bashir is maneuvering for foreign sponsors to keep himself in power
Even after South Sudan’s secession in 2011, Sudan remains a multiethnic and multireligious state. The highly centralized regime in Khartoum struggles to rule a country split between three distinct identities: Arab, Afro-Arab, and African. In the states of Darfur, Blue Nile and South Kordofan, where self-determination aspirations persist, a low-intensity conflict continues, pitting the Sudanese Armed Forces against the Sudan People’s Liberation Movement-North (SPLM-N).
Open contestation of President Omar al-Bashir’s regime has reached cities like Port Sudan and Khartoum. The austerity measures adopted in the 2018 budget (which include reduced wheat and energy subsidies) led to a sharp rise in consumer prices: bread, meat and sugar prices doubled, in a country where the average wage remains $200 a month. Mass dissatisfaction with the subsidy cuts was aggravated by the earmarking of three-quarters of the 2018 budget to defense and security outlays.
Between a rock and a hard place
As president of Sudan, Mr. Bashir has survived significant challenges, including almost three decades of war against the Sudan People’s Liberation Army; the secession of South Sudan in 2011 and the consequent loss of 75 percent of the country’s oil revenues; the imposition of U.S. sanctions; 15 years of war in Darfur, and two arrest warrants from the International Criminal Court (ICC).
The resilience of the Bashir regime can be explained by the combination of two factors: the loyalty of the National Congress Party (NCP) and the Sudanese Armed Forces, and the creation of a vast patronage network that was first fed by oil revenues and then by the generosity of some foreign sponsors. As the end of his second term approaches, however, President Bashir seems to be losing both the sticks and the carrots that have sustained him in power.
International scrutiny acts as a curb on President Bashir’s ability to punish internal opponents.
The lifting of United States sanctions in October 2017 was seen as an opportunity for Sudan to revive its faltering economy, rehabilitate its image and reenter the global order. However, the country is still on the U.S. terrorist sponsors list, which denies it access to international debt relief and American foreign aid. Sudan is under scrutiny by international observers, and any excesses committed by the regime diminish its chances of being removed from the list. This acts as a curb on President Bashir’s behavior and deprives him of sticks to punish internal opponents.
The 2020 problem
Aware of his precarious position, the president has been trying to keep his options open until the 2020 elections. In Darfur, Blue Nile and South Kordofan, Mr. Bashir has adopted a conciliatory tone while keeping up the military pressure against rebel groups. He has announced a presidential initiative for dialogue on the country’s permanent constitution, calling for the participation of parties, movements and civil society organizations, while ordering the release of all political prisoners.
At the same time, however, he recently reshuffled the army’s leadership and later announced a program to strengthen the military (including pay increases), which will be implemented with Russian support. This move suggests that Mr. Bashir may be working on a plan B, as he faces an undeterred political opposition and increasing restiveness within his own NCP, where some high-ranking officials believe he should step down in 2020.
The president has few incentives to relinquish power. Besides the usual concerns shared by long-standing authoritarian leaders (including the safeguarding of his wealth and physical security), Omar al-Bashir would be exposed to the additional risk of his ICC indictment.
From 1999 until 2011, Sudan was a fast growing, oil-led economy and a beneficiary of the 2000s commodities super cycle. Although some improvements were made during these years – including infrastructure development and investments in education – in 2011 Sudan remained an oil-dependent, centralized and poorly managed economy.
The country has significant economic potential, however, in part due to its strategic location at the juncture of the Maghreb, sub-Saharan Africa, and the Middle East. Sudan is Africa’s third largest state by territory, of which more than 70 percent is suitable for crop production. It also has significant mining resources, with estimated gold reserves of 500 tons and iron reserves in 1.5 billion tons.
On present performance, Sudan’s economy is in deep trouble. The value of the Sudanese pound continues to fall, and monthly inflation rose to 57.6 percent in April – above the threshold for hyperinflation. Rising business costs, the scarcity of essential goods and the disruption of daily lives in large urban areas reveal the dimensions of the economic crisis, which threatens to spill over into politics and ignite popular unrest.
According to the International Monetary Fund, Sudan’s public and external debt (estimated at $54.1 billion in 2017) is both “high” and “unsustainable.” While the country is eligible for comprehensive debt relief under the 1996 Heavily Indebted Poor Countries Initiative (HIPC), this will not be possible unless it is removed from Washington’s sponsors of terrorism list. Besides, debt relief under the HIPC would depend on the goodwill – and generosity – of several large international creditors.
These difficulties make it clear that the lifting of U.S. sanctions was not a cure-all, although it should be treated as a significant step. A sustainable recovery will hinge on austerity measures and extensive reforms, always a difficult combination to handle – especially given the need to maintain internal stability and satisfy international creditors and donors.
Deep ambiguities also characterize Khartoum’s foreign policy. The regime’s main goal is to find sponsors and strategic allies in the Horn of Africa and the Middle East, two areas marked by increasing security and economic rivalries among powers with competing – and often irreconcilable – interests. Sudan is also facing tensions with its neighbors.
Relations between Cairo and Khartoum are particularly strained. President Bashir has accused Egypt of funding opposition movements in Darfur and disrespecting Sudanese sovereignty in the Halayeb triangle (an area of some 20,000 square kilometers on the African coast of the Red Sea, disputed by the two countries since 1956). The Egyptian regime, in turn, is suspicious about Khartoum’s closer relationship with Ankara. Since the overthrow of President Mohammed Morsi in 2013, relations between the two countries have remained tense. Sudan has granted Turkey a 99-year lease to rehabilitate the Suakin port and build docking facilities for both commercial and naval vessels.
Sudan aims to benefit from the Middle East’s geopolitical puzzle, in which it is a relatively important piece.
Another point of contention is the Grand Ethiopian Renaissance Dam (GERD). This $4.8 billion project, entirely financed by Ethiopia, is expected to be completed before the end of 2018, potentially tripling Ethiopia’s electricity production. However, it remains unclear how the dam will affect the Nile’s water flow in Sudan and Egypt. The fact that Khartoum aligned itself with Addis Ababa has further aggravated relations between two countries.
The Sudanese regime is also determined to benefit from the Middle East’s complex geopolitical puzzle, in which Sudan is a relatively important piece. After decades of nurturing a special relation with Iran, Sudan joined the Saudi-led coalition fighting in Yemen against an Iran-supported insurgency. This move was motivated by Riyadh’s generosity and its diplomatic efforts to get U.S. sanctions lifted. However, following the Gulf crisis, Khartoum did not heed Riyadh’s calls to curtail its close cooperation with Qatar, which is Sudan’s most significant foreign donor. These circumstances reinforce the hypothesis of a stronger Doha – Ankara – Khartoum axis.
The risks taken by Khartoum are partially explained by Omar al-Bashir’s realization that instability in Sudan would compromise both EU and U.S. interests. With Libya in chaos, Somalia looking fragile and ongoing conflicts in Syria and Yemen, Sudan’s help in fighting terrorism and stemming the migrant flow is invaluable.
The baseline scenario is for President Bashir to remain in power beyond 2020. In this case, in keeping with the 2018 budget, he will continue to invest heavily in securing the military’s loyalty and preserving his patronage network. To increase his chances of staying in office, Mr. Bashir will not hesitate to manipulate the constitution or resort – if necessary – to violence. In the absence of political and economic improvements, Western powers will review their policies toward Sudan, which will turn to less demanding allies and sponsors.
Under a less likely scenario, President Bashir’s leadership would end in 2020 or even before, following an agreement between the leading factions of the ruling NCP and the military. The trigger would be Sudan’s economic situation, which even under the best circumstances is expected to get worse before it gets better.
This second scenario is deemed less probable because it would depend on a combination of factors: most importantly, the formation of a strong internal opposition that wins at least tacit support from foreign powers. Even though Omar al-Bashir’s continued tenure would prevent full normalization of relations between Sudan and the international community, the security risks posed by his ouster and a turbulent transition in Sudan are high.
Perhaps the least likely, though still possible, scenario entails an economic recovery and a relatively smooth leadership transition in 2020. This assumes Sudan will succeed in striking a delicate balance: implementing needed reforms while preserving relative political and social stability. Economic recovery, though slow, would be driven by the country’s reintegration into the global financial order, which would bring access to credit and debt relief, resumption of trade and increasing foreign investment inflows.