Sudan: U.S. sanctions to have little fiscal impact

Thursday 31 May 2007.

May 30, 2007 (KHARTOUM) — Fresh U.S. economic sanctions on Sudan will have minimal impact in Khartoum because it has no direct trade ties with the United States, a senior Sudanese Finance Ministry official said on Wednesday.

U.S. President George W. Bush imposed new unilateral sanctions on Sudan on Tuesday and sought support for an international arms embargo out of frustration at Sudan’s refusal to end what he called a genocide in war-ravaged Darfur.

"It doesn’t have that much effect on the economy. We don’t have direct economic or trade relations with the United States," the Finance Ministry official told Reuters, asking not to be named because he was not authorised to speak to the press.

"Our economy is shifting from the USA and Europe to the East. We have almost 70 percent of our foreign trade with the East," he said, adding that the government conducts most of its financial transactions in euros.

Despite sanctions that have blocked much Western investment, Sudan’s economy has benefited from Chinese and Asian funds with an expected growth rate of up to 13 percent this year. China buys much of Sudan’s 330,000 barrels per day of crude, sells Khartoum weapons and invests heavily in construction projects.

Accusing the Sudanese government of obstructing U.N. efforts to bring peace to Darfur, Bush announced new sanctions that would bar 31 companies controlled by Sudan from doing business in the U.S. financial system.

The companies targeted include firms in Sudan’s booming oil business and one accused of transporting weapons to government and militia forces in Darfur. Bush also imposed fiscal sanctions on four Sudanese individuals, including two senior officials and a rebel leader suspected of involvement in Darfur violence.

MORE A POLITICAL STATEMENT

Analysts said they saw the sanctions as more a political statement than a measure likely to push Khartoum to act against perpetrators of violence in Darfur, where the United Nations says 200,000 people have died since conflict flared in 2003.

Sudan is already an almost entirely cash economy, even for very large transactions. Credit cards are not accepted even at the country’s most expensive hotels and shops.

"The sanctions are more a political statement of U.S. displeasure. ... It is a tool the U.S. has used in many places in the world," said Alex Vines, Africa analyst at Chatham House in London.

"In the short-term, the Sudanese are going to be very frustrated. They may dig their heels in," he said, adding that might translate into a slowdown in talks for a "hybrid" Darfur peacekeeping force, although Sudan may ultimately still agree.

Sudan says it hopes to reach a compromise with the United Nations over the proposed hybrid force, which envisions more than 23,000 African Union and U.N. troops and police to protect civilians in Darfur and use force to deter violence.

The United States and Britain are considering also expanding U.N. Security Council sanctions on Sudan, but China, Russia and South Africa are wary such action would stop violence in Darfur.

Although penalties, such as an international arms embargo, would have more impact than the expanded U.S. sanctions, U.N. bans against Sudan have been hard to enforce.

U.N. Secretary-General Ban Ki-moon, who has been talking to Sudanese leaders, refused to comment directly on U.S. or U.N. sanctions but indicated they may interfere with his consultations.

(Reuters)