Time to revisit America's sanctions on Sudan

For some two decades, it has been the policy of the United States government to essentially ban American businesses and individuals from doing business with Sudan. With a few exceptions, the sanctions regime put in place under Presidents Clinton and George W. Bush and renewed by President Obama at the end of October bans the importation of Sudanese products and prohibits the export of U.S. goods, technology and services to, as well as the performance of "any contract in support of an industrial, commercial, public utility, or governmental project" in, the East African country. As I argued earlier this year, having adopted sanctions as the weapon of choice against the admittedly problematic regime of Sudan's President Omar al-Bashir, Washington has also exacted a heavy toll on some very vulnerable groups unfortunate enough to be caught in the middle of the crossfire of its economic war. Since then, additional evidence from a number of international agencies and other organizations has not only confirmed the negative impact of the sanctions on the Sudanese population, but also how the embargo has adversely affected key U.S. foreign policy objectives with regard to human development.

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The International Monetary Fund reports that the $8.9 billion penalty levied against the French bank BNP Paribas last year for violating U.S. sanctions on doing business with Sudan and other countries has caused a breakdown of correspondent relations between Sudanese banks and their foreign counterparts, leading to the "shrinkage of supplies and higher cost of imports ... thereby fueling inflation and undermining macroeconomic stability. These adverse developments will impact the poor and the most vulnerable segments of the population, and will most likely increase poverty rates in Sudan."

Nor is it just the private sector that is subject to the purview of the U.S. Treasury Department's Office of Foreign Asset Control (OFAC), the main sanctions enforcer. Even multilateral development finance institutions like the African Development Bank (AfDB) have had to secure licenses from the Treasury agency to bring in money for their work in health, education and livelihood sectors because of the new reluctance of intermediary banks to transmit funds to those projects in Sudan. According to one AfDB document, the consequent delays in funding made it "difficult to achieve the intended project impacts at the detriment of vulnerable rural households and poor beneficiaries." The examples cited included "delays in the reconstruction of elementary schools destroyed by flood in certain states, as well as adverse effects of delays in the implementation of rural water, sanitation and livelihood programs, and most severely agriculture projects which are sensitive to delays due to their dependence on seasonality." Even after the OFAC licenses were obtained, some financial institutions requested additional documentation and clarifications in order to ensure compliance with the sanctions regime, adding additional delays to the flow of funds.

The sheer cost of compliance with U.S. sanctions — to say nothing of the outright fear of the consequences of running afoul of them — has led some banks to simply adopt a blanket policy of not dealing with any transactions related to Sudan, rather than having to investigate every single transaction and access potential exposure to sanctions. That was the recent experience of the Omdurman Water Supply and Optimisation Project, a humanitarian initiative to provide clean drinking water to more than 1.5 million people in the North Omdurman area close to the Sudanese capital of Khartoum. The project was originally seeded with a 24 million euro grant from the Dutch government, with additional funding coming in the form of soft loans from the international development banks of the Netherlands, Malaysia and South Africa. A public-private partnership, the Al Manara Water Company, was established to design, build and run the 200,000-cubic meter-per-day water treatment plant on a build, own, operate and transfer (BOOT) basis, albeit with a nonprofit "break-even" twist — until the loan is repaid after 10 years.

In the five years since the water plant began operations, the management has noticed that routes available to them to transfer funds, whether to repay the development banks or to procure spare parts, have tightened considerably because of concerns about compliance with U.S. sanctions. Moreover, recently, some manufacturers have refused to supply equipment destined for Sudan, even though it would be used in an internationally financed and operated humanitarian project not targeted by the sanctions (in fact, the promise to "promote sustainable access to clean water" was one of the priorities in the Obama administration's 2012 "U.S. Strategy Toward Sub-Saharan Africa"). As one manager noted to me, by "restricting legitimate operations and pushing those responsible for such operations to seek solutions for making financial transactions and/or the procurement of spare parts that are more costly, more time consuming and where it may also be difficult to establish the legitimacy of the companies and routes being used by third-party agents," this state of affairs actually undermines the ability to monitor (and control) dealings that supposedly is the raison d’être of having rigorous sanctions in place.

Two weeks ago, the United Nations Human Rights Council's special rapporteur on unilateral coercive measures, Ambassador Idriss Jazairy, completed an eight-day visit to Sudan with a critique of the sanctions regime:

The reality on the ground has proved that these measures do not have a negative impact on officials or on any elite group. Their full impact is on innocent citizens and on a deepening of the gap in income distribution within the Sudanese society and between provinces. It also resulted in broadening the black market and breaking away from the control of financial transactions. The latter came to avoid the official financial network. This encourages the emergence of a parallel economy which was exposed to a variety of possible illegal practices.

Jazairy is no political naïf; he is a widely respected diplomat and international civil servant whose curriculum vitae includes service as president of the International Fund for Agricultural Development (IFAD), a specialized U.N. agency that works on rural poverty in developing country, as well as CEO of the Agency for Cooperation and Research on Development (ACORD), a consortium of international nongovernmental organizations working on empowerment of the poor in Africa. Thus, he does not advocate simply abolishing the sanctions regime with no thought as to what will replace it. Rather, as he diplomatically suggests:

It is worth mentioning in this regard that the Security Council now avoids resorting to comprehensive sanctions in view of their negative unintended impact on important segments of the innocent populations of the targeted countries. In light of the experience acquired through comprehensive sanctions, the Council has come to resort to sanctions that have to be targeted on specific sectors or on specific persons 'of concern.'

The "National Security Strategy" released earlier this year by the Obama administration reiterated its preference for sanctions as "an effective tool for imposing costs on irresponsible actors." Nevertheless, the document also promised that the measures would "be carefully designed and tailored to achieve clear aims while minimizing any unintended consequences for other economic actors, the global economy, and civilian populations." Sufficient evidence has accumulated that America's economic embargo against Sudan no longer meets these criteria — if it ever did — and therefore it is high time for the administration and the Congress to revisit the comprehensive sanctions regime and determine whether any case, strategic or moral, can be made for keeping it in its current form.

Pham is director of the Atlantic Council's Africa Center.