How US sanctions hurt ordinary Sudanese families

Hamdan Wadi Dldoom Correspondent
The 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, 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.

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 bottom of the pyramid.

They hurt the poor hardest.

Sudan has been no exception to this rule.

In terms of sectoral impact the following reflects the gravity of the unilateral coercive measures (UCM).

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 remittance inflows from family members working abroad.

This has wreaked havoc on the planning and budgets of millions of households for basics like food, school fees, and medical bills or other types of 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 the 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 businesses 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 US government is on the cusp of granting an OFAC 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 finance for large scale infrastructure, agricultural, and industrial projects (so called “big-ticket” projects) that could transform the living standards and opportunities for economic advancement of ordinary Sudanese.

Agriculture Sector: US sanctions have also damaged the chief source of livelihood of ordinary people and families and sectoral backbone of the Sudanese economy: 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 cooperatives (the bedrock of agricultural output for domestic consumption) have not escaped unharmed by sanctions.

Like large Sudanese agricultural companies like WNSC and KSC, both subsistence farmers and cooperatives 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 and farmers’ cooperatives — in other words, poverty escalation — and an acute 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.

US financial assistance that had been directed to the supply of agro chemicals has also been ended by the sanctions; ditto a ban on sales of modern irrigation systems and equipment.

Together, these constraints have meant that many ordinary farmers in Sudan have either been forced to reduce cultivated areas or have gone out of business entirely, owing to the high cost of producing an ultimately low agricultural yield; another fillip to poverty rates in Sudan.

Lastly, sanctions have also meant that Sudanese companies already blessed with (or having the potential to achieve) appropriate scale have been unable to access ‘gold standard’ heavy American agricultural equipment such as John Deere tractors, Cameco harvesters, and Caterpillar land-preparation vehicles.

This has also impacted indirectly on ordinary Sudanese; crop yields and arable yields in all but a slither of Sudan have thus remained way below maximum potential, so undermining federal and state ability to respond effectively to localised food emergencies.

Transportation sector: Ground transportation has also suffered as a result of the US sanctions. Sudan has only around 23 active locomotives, while 19 years ago, Sudan had 131 locomotives. The reason for this crippling blow to Sudan’s infrastructure is the refusal due to the sanctions of General Electric Company (GE) to provide spare parts for the railroad locomotive engines it had originally supplied to Sudan. Without adequate spare parts Sudan has been unable to establish a viable railway system.

As a result of the inadequate railway transportation system, and with only a nascent though growing paved road network, most areas in Sudan still function as de facto land-locked states, with all the associated challenges and costs it entails for doing business for small and micro firms in both the (dominant) informal and formal sectors, and jump-starting pro-poor economic and social development projects, too. The sanctions-induced lack of a national railway network has also meant that it has been excruciatingly difficult at times for international aid convoys to reach the states of Darfur and their IDP camps with food and needed supplies safely; many convoys have come under attack and looting by bandits and other unidentified assailants on the road. In addition to the physical barrier of moving agricultural goods by train across the country, a financial barrier has arisen. Without adequate rail transportation, food prices have risen significantly across Sudan over the last few years and, tragically, those left most vulnerable to this price volatility are the poorest of the Sudanese poor, who find it increasingly difficult to afford sufficient food and other essentials.

Health Sector: Imports of x-ray imaging, CT and MRI scanning equipment and other medical-related items have been exempted from US sanctions; but they are still subject to individual licensing approval from OFAC.

There is a strong case for exempting medical related items from sanctions entirely because OFAC licensing approval for such imports has not been swift enough: numerous, needless deaths of ordinary Sudanese (especially infants and the elderly) have resulted from protracted delay in securing OFAC approval to service or import spare parts from the US for vital hospital machinery.

Sanctions have also meant that the US National Institute of Health (NIH) cannot grant money to an American or Sudanese institution working to cure or analyse life-threatening endemic diseases threatening, or already prevalent in, Sudan. Diagnostics by Sudanese doctors and other medical professionals have thus been hobbled severely, culminating in entirely avoidable deaths – especially among vulnerable social groups. Sanctions-constrained medical diagnostics have also often thrown ordinary Sudanese families into financial hardship by forcing them to seek better (and in many cases life-saving) diagnostics abroad for their loved-ones.

The sanctions have also severely affected pharmaceuticals production in Sudan: it has led to the loss of world-leading American technical expertise, and US-made pre-cursors, machinery, and spare parts. The effects of these losses on ordinary Sudanese have been manifold. Notably, this has included reduced access to anti-malarial and other medicines for combating endemic diseases amongst the most vulnerable Sudanese individuals and households, owing to the shortage of domestic generic and specialist drugs (which are often of poor quality, too).

Information Communication Technology (ICT) Sector:
The United States Government announced a partial lifting of sanctions relating to educational exchange in April 2013; however, this relaxation targeted academic research and the free flow of information between educational institutions and professional associations – not, the personal use of communication technologies, per se. In other words, the current sanctions regime on the ICT sector continues to impact negatively on ordinary Sudanese citizens’ access to knowledge and information online in a number of sectors including educational institutions and humanitarian efforts that utilise geographic information system (GIS) technology. Indeed, the current sanctions regime on the ICT sector is even stiffer than that applied to Iran. For example, computer science students in Sudan have been unable to obtain their certificates after taking and passing online courses affiliated with US institutions such, MITx. The reason given is that certificates are not issued for countries placed on the SST list.

Additionally, online educational websites, such as Google Scholar and Audacity remain blocked to users in Sudan. Additionally, crisis mapping, which was very useful during the last floods in August 2013, is hobbled in Sudan by the sanctions. Crisis mappers have remained unable to access or purchase tools and/or applications made by American companies, such as Google (including People Finder and Google Crisis Map) or products by ESRI, an American company that specialises in GIS technology.

The sanctions on the ICT sector as they stand in Sudan also outlaws software sales, servicing, and maintenance updates on lynchpins of the digital age, including all Microsoft products, Apple Operating Software, and Google’s Android System. No Sudanese inside the country can purchase original software online. Regular citizens, as well as universities, rely heavily on pirated software that can cause irreparable harm to hardware.

Public finances impact
Severe and – ultimately unsustainable – constraints on public finances have been the most damaging factor of the US sanctions regime on the living standards of ordinary Sudanese citizens and households. Continuing US-Sudan sanctions, and especially the underlying and erroneous SST designation, legally prevents US economic assistance to Sudan and mandates the US Government to oppose any financial support to Sudan from any international financial institution in which the United States has membership.

Put starkly, therefore, a ban on trade and investment with 25 percent of the global economy (the USA), coupled with zero financial help from international financial institutions like the IMF and World Bank, have retarded the eradication of widespread poverty in Sudan.

Indeed, over the last few years, ordinary Sudanese have weathered both the largest shock to the world economy since the Great Depression and sharp rises in world food prices without even a nickel from the IMF or World Bank or Western-donor-funded social safety net.

The sanctions and the SST listing have also restricted the ability of Sudan to obtain foreign debt relief; this, too, has impacted on the living standards of ordinary Sudanese, as the Sudanese government needs to have much more headroom to take on new concessional loans aggressively to finance much needed pro-poor social infrastructure investments across the country.

· Hamdan Wadi Dldoom is the Ambassador of Republic of The Sudan to Zimbabwe

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