The Failure of International News Reporting on Sudan’s Economy, 2011 – 2018
Eric Reeves | December 24, 2018 | https://wp.me/p45rOG-2kD
News reporting on Sudan has finally begun to highlight the ongoing economic collapse of the past seven years; but even in doing so, there is remarkable superficiality and failure to look with any historical depth at how the present catastrophe began—and was made inevitable—by policies that are a function not just of mismanagement by the current regime, but gross corruption. Priorities in the national budget have been wildly skewed for decades toward the military and security services, with only very small amounts devoted to health, education, and the crucial agricultural sector. Arable land has been sold or leased for decades in order to raise cash for a kleptocratic regime.
This regime has bought political support by misappropriating national wealth. At the same time, it made none of the adjustments that were clearly going to be necessary with the secession of South Sudan in July 2011 and the loss of most oil reserves. Despite the inevitable consequences of a loss of hard currency (Forex) necessary for imports, the regime continued to wage expensive wars in Darfur, South Kordofan, and Blue Nile. Profligate weapons purchases have continued, even as almost all economists who study Sudan’s economy estimate that the security and military forces command well over 50 percent of the national budget.
All this has been reported by Sudanese news sources, and a good deal of information can be gleaned from other sources as well. But by failing to take the radical problems of Sudan’s economy seriously, international news coverage has been taken largely by surprise over the present massive demonstrations against the painful failures of that economy. Reporting that now emerges focuses on only a few of the many causes of economic collapse.
For a number of years I have attempted to distill what economic and financial news from Sudan is available, and the result has been a continuous series of publications and postings. Two are of particular significance, I believe, but I have provided below a full bibliography of analyses and syntheses (with links) below.
I would point in particular to two lengthy reports for the Enough Project (Washington, DC):
[1] “Watching the Bubble Burst: Political Implications of Sudan’s Economic Implosion,” Enough Project Forum publication, 17 September 2014 | http://www.enoughproject.org/reports/enough-forum-watching-bubble-burst
(Executive Summary below)
…and:
[2] “Kleptocracy in Khartoum: Self-Enrichment by the National Islamic Front/National Congress Party, 2011 – 2015,” Enough Project Forum publication, 2 December 2015 | http://www.enoughproject.org/blogs/enough-forum-release-kleptocracy-khartoum
(Executive Summary below)
But a good deal has occurred since publication of these two long reports:
• Accelerating Economic Collapse in Sudan Under NIF/NCP Regime Ignored by the international community, but causing vast suffering and destruction among ordinary Sudanese, November 2018 | https://wp.me/p45rOG-2jj
[This analysis largely forecast what we are now seeing play out in the spreading popular uprising in the country.]
• The Realities of Sudan’s Economy Make Nonsense of IMF Assessments, October 25, 2018 | https://wp.me/p45rOG-2j5
[The international view of Sudan’s economy has for far too long been guided by the absurdly inadequate assessments of the International Monetary Fund (IMF). The most egregious example is that of Edward Gemayel, IMF’s Mission Chief for Sudan. An IMF press release of October 12, 2013–two years after the secession of South Sudan—reports that, “Edward Gemayel, IMF Mission Chief for Sudan, noted that ‘Sudan has a long track record of implementing sustainable economic policies.’” Realities are quite otherwise.]
• “Watching Sudan’s Economic Bubble Burst”—Four years later, September 12, 2018 | https://wp.me/p45rOG-2i8
[Exactly four years prior, I had published “Watching the Bubble Burst: Political Implications of Sudan’s Economic Implosion” (September 2014 | https://enoughproject.org/files/EnoughForum-WatchingTheBubbleBurst-Reeves-Sept2014.pdf/. Every major conclusion and assessment in the analysis has been borne out by subsequent events: the economy is indeed “bursting.” A dispatch today from Radio Dabanga offers the opinions of Sudanese economists and political analysts, assessing the implications of the conspicuous charade that is the regime “re-shuffling” recently announced by indicted génocidaire and president of Sudan, Omar al-Bashir. This is all self-serving blather that will do nothing to change the fundamental issues crippling the Sudanese economy.]
• A Compendium of Recent Brief Commentaries/News Dispatches on Economic Collapse in Sudan,| July 7 – August 7, 2018 | https://wp.me/p45rOG-2gA
…and:
• A Compendium of Recent Brief Commentaries/News Dispatches on Violence, Security Threats in Darfur (Number 2) | Eric Reeves | July 1 – July 24, 2018 | https://wp.me/p45rOG-2gj
[These compendia included the kind of news that was almost entirely ignored by international news organizations, even as the implications of what was being reported by Sudanese news sources made clear the impending crisis.]
• The Collapse of Sudan’s Economy is Accelerating, Along with Human Suffering | Eric Reeves | May 10, 2018 | https://wp.me/p45rOG-2ff
• International Pretense and Ignorance Will Not Slow Sudan’s Economic Collapse | Eric Reeves | May 7, 2018 | https://wp.me/p45rOG-2f9
• Economic Collapse in Sudan is Rapidly Accelerating, February 8, 2018 | https://wp.me/p45rOG-2dt
• Sudan’s Fateful Moment: Will surging protests grow to become countrywide and bring down the hated NIF/NCP regime? Or will we see an even bloodier repeat of September 2013? January 21, 2018 | https://wp.me/p45rOG-2bZ
• Sudan’s Economic Catastrophe Brings Country to the Brink: A Compendium of Very Recent Reports, January 9, 2018 | https://wp.me/p45rOG-2by
• Economic Collapse is Accelerating in Sudan–and so is the potential for explosive civil unrest, and equally massive, violent repression by Khartoum regime, December 27, 2017 | https://wp.me/p45rOG-2b1
• International Celebration of Lifting of U.S. Economic Sanctions on Sudan: Exercises in Self-Interest and Culpable Ignorance, October 10, 2017 | http://wp.me/p45rOG-26W
• Khartoum (Sudan) and the Peripheries: Where the Money Goes—and Where it Doesn’t Go, March 4, 2017 | http://wp.me/p45rOG-21D
• Alex de Waal declares Omar al-Bashir Worthy of a “Nobel Prize in Financial Management”—Irony or Perverse Self-congratulation? May 7, 2016 | http://wp.me/p45rOG-1Te
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[1] “Watching the Bubble Burst: Political Implications of Sudan’s Economic Implosion,” Enough Project Forum publication, 17 September 2014 | http://www.enoughproject.org/reports/enough-forum-watching-bubble-burst
Executive Summary
Despite very considerable evidence that the economy of Sudan is collapsing under the weight of numerous unsustainable pressures, there is no full extant account of these pressures at this critical moment in the political history of Sudan. Understanding the human and political consequences of economic collapse in Sudan is also critical in making sense of the future of now independent South Sudan. Nominally tasked with monitoring the Sudanese economy, the International Monetary Fund (IMF), and to a lesser degree the World Bank, have failed to present a full or accurate picture—too often dancing around difficult issues and simply accepting at face value figures provided by the Government of Sudan. Every one of the eight key charts in the IMF’s July 2014 report indicates as its source of data: “Sudanese authorities and staff estimates and projections.”
Most conspicuously, the two organizations have failed to provide anything approaching realistic figures concerning military and security expenditures. There is in the July 2014 IMF report not a single line item—not one—reflecting or indicating the scale of military and security expenditures. We may learn about “Regulatory capital to risk-weighted assets”; but we will learn nothing about investments in weapons acquisitions from abroad or the growing domestic armaments production. We learn nothing of salaries and logistical expenditures for the Sudan Armed Forces or the militias the government supports. Since the Government of Sudan—essentially the National Congress Party (formerly the National Islamic Front)—is deeply threatened by a fuller understanding of the dire straits in which the economy currently lies, it has an obvious interest in doing what it can to minimize popular understanding of growing economic threats, and in particular the excessive budgetary commitments to the Sudan Armed Forces, various security forces, and militias.
Certainly there is no dearth of studies, statistics, or analyses of the economy (see Bibliography). But none does enough to assess the impact of Sudan’s growing economic distress on various crises within Sudan itself and the region as a whole, most particularly in South Sudan. Continued serious fighting in Darfur, the Nuba Mountains of South Kordofan, and Blue Nile mean that the Government of Sudan is obliged to spend inordinate amounts of annual revenues on armaments, soldiers’ salaries, logistics, and the security services that are an integral part of the military power wielded by the government. Estimates vary widely, but the consensus is that significantly more than fifty percent of budgetary expenditures are directed to the military and security services. Moreover, the oil revenues that fueled the decade of economic growth following the first oil exports (August 1999) are now only a fraction of what they have been. This augurs extreme difficulties in negotiating with South Sudan over final boundaries, since many of the contested areas—including Abyei—have significant oil reserves.
In all the regions where fighting is occurring, agricultural production has declined precipitously, creating extraordinary ongoing humanitarian needs. The government has made provision of relief assistance impossible in the most affected areas of South Kordofan and Blue Nile, and for more than a decade has harassed, impeded, expelled, and threatened humanitarian organizations operating in Darfur, where security has become so bad that further withdrawals by organizations are inevitable.
It is in the domestic political arena, however, that the economy is most worrisome for the NCP government. Inflation remains extremely high—and likely a good deal higher than suggested by the figures coming from the Central Bank of Sudan—and the Sudanese Pound continues a rapid decline in value against the dollar. There is exceedingly little foreign exchange currency (Forex), which has led to acute difficulties in financing imports of all kinds, even food and refined fuel for cooking (Sudan’s refining capacity is not sufficient to meet very large demand). Bread shortages earlier in 2013 and 2014 were a direct result of a lack of Forex for purchases of wheat abroad, exacerbated by the increased cost to bakeries of cooking fuel. Looming over the entire economy is the massive external debt, which in August stood at US46.9 billion according to the IMF; the government can neither repay nor service this debt without reforms—economic and political—it has shown itself unwilling to make.
Last September and October, there was a serious, sustained, and occasionally violent public uprising to protest the price increases resulting from the government’s lifting of subsidies for fuel (including cooking fuel). The government response was swift and brutal, with “shoot to kill” orders in place from the beginning of the uprising according to Amnesty International. More than 200 demonstrators were shot to death, and many more wounded; some 800 people were arrested. The figures are likely much higher. Despite the normalcy of IMF accounts of Sudan’s economy, there can be little doubt that it has reached the breaking point; and continued inflation, which may reach to hyperinflation, will—as it has before in Sudanese political history—be the economic force that brings down the government.
The emergence of the National Consensus Forces as a coalition of smaller northern political parties committed to “regime change” is but one sign of growing determination to end the 25-year rule of the NIF/NCP. The “Paris Declaration” between the National Umma Party (NUP) and the Sudan Revolutionary Front (SRF) is another such sign. The NUP, led by Sadiq al-Mahdi, is one of the two traditional sectarian parties that have long had significant political support. The SRF is a coalition of armed rebel groups from Darfur, South Kordofan, and Blue Nile that is also committed to regime change, by force if necessary.
The current Government of Sudan has no way to respond to both increasing political pressures and the consequences of a rapidly deteriorating economy. As a result, it will almost certainly resist change, with violent repression, for as long as possible; for many of its leaders have been or will be the subject of arrest warrants for crimes against humanity by the International Criminal Court, and will have no recourse or avenue of escape once the government falls. They are as a consequence especially dangerous, and the fall of the regime may well be very bloody. The international community should plan now how to assist in the creation of a democratic, inclusive, and secular Government of Sudan, and should be prepared to address some of the most immediate problems, including widespread food insecurity.
Full text, including text, charts, graphs, and bibliography | http://www.enoughproject.org/reports/enough-forum-watching-bubble-burst
[2] “Kleptocracy in Khartoum: Self-Enrichment by the National Islamic Front/National Congress Party, 2011 – 2015,” Enough Project Forum publication, 2 December 2015 | http://www.enoughproject.org/blogs/enough-forum-release-kleptocracy-khartoum
Executive Summary/Overview
On December 2, 2015, the Enough Project published an Enough Forum piece, “Kleptocracy in Khartoum: Self-Enrichment by the National Islamic Front/National Congress Party,” written by Eric Reeves. This piece analyses the mechanisms that the National Islamic Front/National Congress Party (NIF/NCP) uses to maintain power and secure wealth, including manipulating the oil market, illicit land sales and expropriations, systemic bureaucratic corruption, financial mismanagement, and state-sponsored violence.
Reeves defines the Sudanese government as a kleptocracy and notes “the use of the military and security services to protect the regime in continual self-enrichment.”
“For the past five years, the current regime in Khartoum has continued to engage in massive theft of Sudanese national wealth. Such theft occurs against a backdrop of some of the world’s highest rates of malnutrition as well as a series of brutal and costly civil wars. Agriculture is in decline as is the economy as a whole, largely because of the brutal kleptocracy that rules and plunders Sudan by force of arms from Khartoum.”
— Eric Reeves, report author and Senior Fellow at the Enough Project
The paper first details the economic and humanitarian implications of Sudan’s corrupt governance structure. Sudan’s dire economic circumstances are manifest through its bread, fuel, and water shortages, high inflation, and weak infrastructure. While most Sudanese economists and observers believe that military and security expenditures make up over half of the national budget, the International Monetary Fund has accepted Central Bureau of Statistics data despite significant omissions or contradictions. This lack of oversight, combined with the regime’s gross misallocation of resources, has led to Sudan’s $[47] billion external debt.
The dire and unsustainable economic situation has in turn led the NIF/NCP to redirect its allegiances from Iran toward Saudi Arabia and the Arab Gulf states to secure financial support. Reeves describes this shift as “duplicitous pragmatism.” State expenditures on military and security forces ultimately enable the regime’s power through the use of force. The regime’s reliance on superior military force and state-sponsored violence has led to a long and grave humanitarian crisis. For example, the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) finds that about 2 million children under 5 years of age suffer from chronic malnutrition and a 2013 Arab Center for Research and Policy Studies poll shows that 54% of Sudanese civilians wish to emigrate.
A disastrous lack of foreign exchange currency (Forex) has left Sudan unable to import sufficient, which costs the country rich in arable land some $1 billion per year. There is as a consequence a shortage of the flour needed to make bread, a staple food for many northern Sudanese. The evidence? Bread lines have been chronic for the past two years.
The piece then delves into the oil industry, land sales, and transparency issues. For example, while the Comprehensive Peace Agreement states that oil revenues would be shared equally between Sudan and South Sudan for oil extracted in South Sudan and then transported to market through Sudanese pipelines, the Sudanese government has manipulated record keeping to keep extensive revenues from South Sudan “measured in billions,” asserts Reeves. Government expropriation tactics vary in form, including taking funds from banks, contract cuts for politicians, and land sales. The state-controlled finance system also facilitates bureaucratic corruption through loopholes and misuse of various financial reporting mechanisms. These practices contribute to Sudan’s distinction as one of the most corrupt countries in the world, landing at 173 of 175 countries on Transparency International’s 2014 Corruption Perceptions Index.
Finally, by perpetuating violence, the regime maintains control and subdues dissent throughout Darfur and across Sudan. As Reeves notes, “the massive expropriation of national wealth by the regime has been possible only because of extraordinary expenditures of that wealth deployed to enable the army and security forces to keep popular will from being expressed.” Reeves concludes that conflict and corruption will continue in Sudan as long as the NIF/NCP remains in power and continues to amass the wealth of a nation in the hands of a few.
For more information, read the full report.