Sudan weakened by US demands on compensation & ties with Israel

For over a year the Khartoum government has been trying to get removed from the US government’s State Sponsors of Terrorism list (SST) which effectively blocks its access to credits (or even debt relief) from the World Bank, the IMF or any financial institution based in the US.

The listing is a remnant of the Islamist operations of the former regime of Omar al-Bashir and the National Islamic Front/National Congress Party which had welcomed Saudi Arabian leader of Al Qaida, Usama bin Laden to Khartoum.

Although many of al-Bashir’s military and ideological henchmen have retained senior posts in the army and security services, the civilian leaders of the transitional government under Prime Minister Abdalla Hamdok are committed to a transition to democratic elections, an independent judiciary and the assertion of human rights.

READ MORE Sudan: International financial backing is key to boosting its transition

The tension between the security holdovers from the Bashir era and the reformers under premier Hamdok is the key fissure in the current government.

For now General Abdul-Fattah Al-Burhan chairs the ruling Sovereign National Council which shares power with civilians in the Transitional government. The Sovereign Council oversees the majority civilian Council of Ministers.

US pressure on Sudan

Many supporters of political change worry that US pressure on Khartoum has embedded the influence of its regional allies such as the authoritarian leaders from Saudi Arabia and United Arab Emirates.

The Hamdok government has pushed through some key state reforms plus a treaty to end a 17-year war between Sudan and rebel factions, namely the Sudan Revolutionary Front (SRF).

But as it pushed through political reforms, it faced growing economic troubles. Under the control of the generals and the intelligence chiefs, with links to Saudi Arabia and UAE, Sudan’s military industrial complex is proving untouchable – but inordinately costly – for Hamdok’s government.

The worse the economy gets, the harder it will be for the civilians to maintain popular support. Then the danger will be that the military uses that loss of support as a pretext to take back full control and wipeout the transition.

The US insistence that Sudan strikes a costly bargain to get off of the terrorist list has made matters worse. Under the deal President  Donald Trump insisted that Sudan must pay $335m to compensate US the families of US citizens killed in the Al Qaida bombings on the US Embassies Tanzania and Kenya in 1998.

READ MORE Can Trump be trusted to remove Sudan from its terror list?

He also demanded that Sudan must normalise ties with Israel. Like most Arab states, Sudan abjured diplomatic ties with Israel due to its occupation of Palestinian territory. Normalising ties with Israel would mean Khartoum would follow the recent moves by the UAE and Bahrain.

Although Sudan has huge debt mountain at an inflation rate of over 200% in September, and its national income set to shrink by 7% this year, it is supposedly bought the $335m needed to pay Washington off the currency market, says analyst Magdi al-Gizouli of the Rift Valley Institute.

Instead, some suspect – but there has been no confirmation –  that Saudi Arabia gave the money to Sudan as part of its own bilateral bargain: Khartoum would recognise Israel which in turn pleases Riyadh’s allies in Washington and gives Riyadh even greater leverage with the Sudan government.

Normalisation with Israel: what Sudan stands to lose

Normalising and recognising Israel has been a huge feat for Trump’s administration. But it remains  problematic for Sudan at best; Sudanese Islamic leaders and past regime bygones remains firm in opposing such a deal.

“There is great danger in this “normalisation” of relations between Israel and Sudan, both for the Abdalla Hamdok government and for civilian governance in general,” says Eric Reeves, a Sudan analyst and Rift Valley Institute fellow. “Not only has it created gratuitous political tensions in the country (most leftists and the Islamists opposed such “normalisation”), but it has strengthened the hand of Abdel Fattah al-Burhan, Mohamed Hamdan Dagalo (Hemeti) and the executive power of the Sovereign Council, as you know, dominated by these two military/militia men.”

READ MORE Sudan’s transition overlord Hemeti still wreaking havoc in Darfur

Reeves adds that problems for Hamdok began in February this year after al-Burhan met with Netanyahu in Kampala in a preparatory meeting – without the knowledge of either the Prime Minister or the Foreign Ministry. “It was, in my mind, a shocking arrogation of a power that should certainly be ministerial. That it was secret suggests al-Burhan knows Hamdok would have objected,” he says.

What the others stand to gain

Indeed, Hamdok has repeatedly rejected ideas of normalising relations with Israel; that is until now.

It seems to be the last major hurdle for Sudan to overcome before being taken off the SST list. “Were Sudan to renege on its commitment to normalise relations with Israel, the US can still use its veto power at Bretton Woods institutions and elsewhere to punish Sudan…and it has a lot more tools at its disposal,” adds Reeves.

“The Hamdok government now simply cannot afford to renege, whatever the cost politically in Sudan. This situation was knowingly created by [Secretary of State, Mike] Pompeo/Trump: [a] savage Realpolitik.”

To date, Khartoum has issued a joint statement of intentions, but parliament would still have to ratify such a move says Lucas van de Vondervoort, a Sudan specialist at the European Institute of Peace.

US has begun consultations at UN toward removing UN sanctions on Sudan over Darfur conflict “at the earliest opportunity,” Sec Pompeo says in new statement, praising “dramatic progress” made by Sudan’s civilian-led transitional govt, including in Darfur—and w/Israel ties pic.twitter.com/7uBLsoURUP

— Conor Finnegan (@cjf39) November 2, 2020

While onlookers in and out of Sudan see normalisation efforts as a win for Israel and President Trump ahead of the US presidential elections, Akol Miyen Kuol, author, columnist and analyst, believes it’s a security matter.

“For America and Israel, the normalisation of ties between Sudan and Israel is mainly because of their national security concern, and since it is a security matter the whole responsibility of the process is directly in the hands of the military generals within the Transitional Sovereign Council led by General Al-Burhan,”

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While Hamdok does not support the normalisation efforts, Miyen Kuol says Sudan can use it to its advantage. “Sudan will benefit from both countries as far as the security issue is concerned, such as training of the Sudanese army and security organs,” he adds.

Constraints under the US ban

According to US Department of State’s website, states put on its SST list means a ban on aid and defence exports along with penalising countries and individuals who continue to associate themselves with any of the countries on that list.

The ban also means a near-complete severance from receiving non-emergency funds from other countries, as well as any trade deals.

Sudan ended up on that list in August 1993 after the country provided a haven for terrorist organisations such as Al-Qaeda, Abu Nidal Organization, Hezbollah, Palestine Islamic Jihad and Hamas. The relations worsened following the World Trade Center bombing when some of the suspects held Sudanese passports.

Despite Sudan’s efforts to fight terrorism with neighbouring countries, the US sanctions remained.  Certain analysts attribute Khartoum’s prolonged designation as a state sponsoring terror to a list of American bureaucratic procedures such as legislative processes, financial statements, and intelligence work, in addition to Washington’s reservations following the Darfur war.

Human rights violations committed during the war in Darfur that began in 2003, saw al-Bashir get hit with an arrest warrant by the ICC, which likely further secured Sudan’s ban.

But Lauren Blanchard, a specialist in African Affairs with the Congressional Research Service (CRS), says bureaucracy is a convenient excuse.

“Rescission of the SST designation doesn’t require Congress to take any action (i.e. they don’t have to pass a bill for it to take effect),” says Blanchard. “The laws establishing the SST designation state that in order for a presidential decision on removing the country from the list to take effect, Congress shall have 45 days to review the decision. If it takes no action, the designation is officially lifted at the end of the 45 days.”

Open for business?

Once Sudan is officially off the SST list, the real effects of that will still take time to trickle down. “Much of the remaining impact of the SST designation on Sudan at this point is reputational, and there are other factors that may continue to deter some investors and foreign banks from reengaging in the country,” Blanchard stated. “So when Sudan will see tangible benefits from delisting is, and will be, hard to gauge.”

Blanchard adds that discerning the before and after of a Sudan with no sanctions will not be obvious to most investors and states. “The Sudanese government hopes, of course, that it will encourage foreign banks to consider reestablishing correspondent banking relationships, but that isn’t something that will happen overnight,” she says. “Delisting will allow the United States to engage more supportively at the IMF and World Bank, including with respect to Sudan’s progress toward attaining debt relief, but even on that issue there are other factors at play that mean there won’t be a clear immediate impact.”

The backdrop to all of this has been Sudan’s transitional government which is still finding its legs. So even when Khartoum finds itself officially off the list, Blanchard says it’s hard to predict where Sudan will be politically at that point. “The decision to delist seems to have widespread support in Sudan, so that may help to bolster the transitional government. On the other hand, given the controversial decision to engage with Israel and the ongoing economic crisis, I’m not sure how these issues will balance out,” adds Blanchard.