Sudan has for long been considered a pariah in Africa. The International Criminal court issued two arrest warrants against its President, Omar al-Bashir, involving five counts of war crimes and three counts of genocide.
Sudan was also involved, for all practical purposes, in a civil war in Darfur. In 2011, South Sudan voted to secede from Sudan. This was an economic disaster for Sudan as the rich oil fields were in South Sudan. The country has long been struggling, given amongst other factors, the economic sanctions the US imposed against it.
However, according to Trading Economics, Sudan has the sixth largest GDP in Africa, despite US and EU sanctions and embargoes. It has a population of approximately 40m people. While it has a somewhat subdued GDP growth rate of only 3.5% (relative to some of its neighbours), what is worrying is its inflation rate of 52.4%. It also has an unemployment rate of 13.3%. Its balance of trade was close to $1billion in the negative in January 2018.
But over the very recent past, there has been a renewal of interest in Sudan as an investment destination.
Sudan and the US
The US recently lifted a number of sanctions on Sudan, motivated by the perception that Sudan had begun addressing concerns about terrorism and human rights abuses against civilians in its Darfur region. The lifting of sanctions rescinds measures imposed in 1997 related to terrorism concerns and other steps put in place in 2006 in connection with the conflict in Darfur.
The sanctions were temporarily eased in January just before President Barack Obama left office, with his administration citing the same progress the Trump administration noted. In July 2017, President Trump extended the review for three months, angering the Sudanese, who stopped some lower-level meetings with US officials in retaliation, but maintained contacts with senior officials.
Lifting the sanctions and ending an economic embargo came after the Trump administration removed Sudan from the list of countries whose citizens are subject to travel restrictions. Other sanctions, however, are still in place for the time being, including those against individuals with arrest warrants related to atrocities committed during the Darfur. Sudan is also still on the list of state sponsors of terrorism.
In addition, there has been a progress on the humanitarian front. Sudan’s government has announced unilateral ceasefires in areas where the Sudanese army has been battling rebels; stopped aerial bombardments that killed civilians and created safe routes for humanitarian aid to get through.
There also are geopolitical factors. Both Israel and Saudi Arabia have urged the US to ease up on Sudan, to encourage it to distance itself from Iran. The US also wants to encourage a regional effort to end the fighting in South Sudan and stemrn one of the biggest wave of refugees since the Rwanda genocide.
The absence of the US influence in Sudan, however, has created an open playing field for China and others.
Sudan and China
Chinese-Sudanese relations date back to 1959, when Sudan became the first country in Sub-Saharan Africa to recognize China. Today, China is the largest investor in Sudan, as it is in Africa as a whole. However, China’s relationship with Sudan is exceptional because of the absence of competition from the US. Other than Cola-Cola, very few American products are readily available to Sudanese consumers.
In 1995, President Omar al-Bashir signed Sudan’s first oil deal with China. Some Sudanese government officials noted sarcastically that it was a surprising coincidence that US sanctions began around the same time China invested in Sudan’s oil industry.
In June 1997, the Greater Nile Petroleum Operating Company was established with the China National Petroleum Corporation (CNPC) taking 40% ownership and Malaysia’s Petronas taking 30%. India’s ONGC Videsh acquired 25% when a forerunner of Canada’s Talisman Energy had to leave due to sanctions.
China has invested in other areas until it now controls as much as 75% of the Sudanese oil industry. Sudan currently produces 133,000 barrels of oil per day – a fraction of what it produced before the south of the country seceded in 2011, taking most of the country’s proven oil reserves with it.
Today, Chinese companies are looking for new oil deposits in Sudan as increasing oil production is one of the government’s priorities. While China started in oil, it now has other interest in trade, mining, and construction as well.
Within the oil industry today, most of the engineers and technical experts in Sudan and South Sudan are Sudanese. They were trained in China. Sudan is the only country in Africa where, over time, more locals have been employed by Chinese companies.
Though not typically see as part of Chinese’s Belt and Road Initiative, Sudan sees itself as playing a critical role in the development of Chinese's plan to link East Asia with Western Europe. The Sudanese government believes Port Sudan on the Red Sea will be an important loop in that belt. Given that Djibouti is becoming a crowded space with many countries developing military bases there, Sudanese harbours such as Port Sudan and Suakin provide flexibility to whoever needs to traverse the Red Sea.
Whereas the US was reluctant to engage in transaction diplomacy back in 1996, when Sudan offered to turn over Osama Bin Laden for sanctions relief, China has proved a willing partner.
While the Trump administration is poised to lift economic sanctions on Sudan, it will be a while before Sudan warms up towards the US. Despite some resentment among the local Sudanese toward the Chinese, due to non-compliance with a Sudanese requirement that the labour force of international companies in Sudan consist of 80% local labor, China’s influence will likely continue unabated.
Given that China is already busy with developing its military base in Djibouti, its increasing presence in Sudan and along the Red Sea en route to the Suez Canal should be a source of concern for the US.
Sudan and Saudi Arabia
Saudi Arabia and the Saudi private sector are currently investing in maritime transport in Sudan, benefitting from the strategic situation of Sudan to construct new harbours and ports in the Red Sea. However, while this new development indicates a rapprochement between Sudan and Saudi Arabia, there are irritations on Sudan’s side due to the failure by Saudi Arabia to deliver on its promises.
President al-Bashir is currently working on winning Qatar and Turkey over to his side to make up for Saudi Arabia’s broken promises. Eager for financial assistance, Sudan severed diplomatic relations with Iran in January 2016 in the hope of securing Saudi investment in agriculture and hydroelectric dams. However, Sudan is still waiting to see these investments. To aggravate matters, Saudi Arabia recently banished tens of thousands of Sudanese nationals on the grounds that they had no residence permits.
In a bid to win the favour of the two main players within the Gulf Cooperation Council (GCC), namely Saudi Arabia and the United Arab Emirates (UAE), Sudan nevertheless agreed to contribute 4,000 soldiers to the war effort in Yemen. Saudi, unfortunately for Sudan, considered these soldiers as behaving like mercenaries. Also, Saudi Arabia is of the view that Sudan is not firmly committed to severing links with Iran, having constructed its security apparatus with the help of the Iranian Revolutionary Guards.
Saudi Arabia is also unhappy about Sudan maintaining relations with Qatar. Sudan’s diplomatic honeymoon with Turkey, which resulted in the handover of Suakin Island to Ankara in return for promises of investment, reconstruction and military cooperation, is another source of unhappiness.
Sudan and Qatar
Sudan and Qatar have recently started to develop a more intense relationship. Qatar’s Minister for Foreign Affairs and Deputy PM, Sheikh Mohamed Bin Abdul Rahaman Al Thani, recently visited Sudan in an effort to boost the strategic relations between the two countries in various domains. His visit was seen as a historic event.
Qatar has been working since 2013 on the restoration of monuments in Sudan and has achieved great successes in this area. The programme to develop the antiquities will continue until 2020.
The development could anger Egypt, which has accused Qatar of supporting the banned Muslim Brotherhood movement – which Doha has denied - and joined a Saudi-led boycott of Qatar last year. Sudan’s strengthening of ties with Turkey and Qatar comes as it pledges further cooperation with Egypt after a year of unstable relations between the two nations.
The current Qatari investment in Sudan amounts to more than a $2bn and is expected to rise with new projects, such as the introduction of Qatar Mining Company (QM), which will invest more than $1bn in its field.
Given the entrenched Chinese presence in Sudan, and the overtures Qatar, Russia and Turkey are evidently making towards the country, the US, if it is interested in curtailing the influence of China and the others, should not take too long before it reaches out to normalize relations with Sudan. The country’s strategic location along the Red Sea makes it a potentially valuable ally.
This article was first published in the New African of May 2018. Republished with permission from IC Publications.