SUDAN WATCH: Why have international creditors reneged on repeated promises to cancel Sudan’s foreign debt?

Tuesday, October 20, 2009

Why have international creditors reneged on repeated promises to cancel Sudan’s foreign debt?

Darfur, southern Sudan, and other ordinary Sudanese in the so-called ‘periphery’ where economic and social development lags far behind Khartoum, stand to gain most if international creditors did what they had repeatedly promised to do following the signing of the Comprehensive Peace Agreement and then the May 2006 Darfur Peace Agreement: cancel Sudan’s foreign debt.

Crucially, Sudan’s (pre-1989) external debt must get wiped off immediately because it needs wiggle room urgently to take on new foreign loans to lay down the roots of an economic take off and, in turn, come finally to grips with the pattern of inequitable economic development in Darfur, south Sudan and other areas of the ‘periphery’ that lies at the heart of Sudan’s history of instability. [...]
For a more nuanced discussion on Sudan’s foreign debt issue, see these recent postings by Ibrahim Adam on the IMF blog: (IMF Direct on Sudan’s foreign debt – a discussion).

Source: Alex de Waal's blog Making Sense of Darfur
Indebted to the Save Darfur Coalition?
By Ahmed Badawi Wednesday, October 14, 2009 
Ahmed Badawi has written and advised extensively on country risk on Sudan at The Economist Intelligence Unit, Dun & Bradstreet, and Fitchratings. He is also the former Middle East and Africa spokesperson for the International Finance Corporation (IFC), Washington D.C. He was also the speechwriter for the Government of Sudan during the north-south Sudan peace talks. Currently, Ahmed Badawi is an advisor to the Government of National Unity, Sudan, and Chief Consultant to the Global Relations Centre, based in Khartoum.

9 Responses to “Indebted to the Save Darfur Coalition?”
Alex de Waal:
October 14th, 2009 
Ahmed is absolutely correct that the great majority of Sudan’s original debt was run up in the 1970s and early 1980s, and that the majority of today’s debt represents a build up of arrears since Sudan ceased managing the debt in a conventional way in 1985. (see: http://blogs.ssrc.org/darfur/2008/11/26/recalling-the-unmanageable-crisis-of-the-1980s/).

International aid was a crucial part of Nimeiri’s ability to grease the wheels of the patronage machine in Sudan and when the aid was suspended for even a short time in March 1985, his time was up. For the next four years, the transitional and elected governments struggled to keep politically afloat at home and on at least talking terms with their creditors abroad. It was too much to manage and democracy collapsed.

After the 1989 coup and the 1990 decision by Hassan al Turabi to support Saddam Hussein, Sudan was cut off from all forms of debt relief and international assistance. Two things then happened.

The first was that the government welcomed any other form of financial assistance, and one of those who came offering funds was Osama bin Laden. International financial ostracism tends to push its targets into the arms of criminals and others.

The second was that, unable to purchase the loyalty of domestic clients, the NIF used a combination of force and ideological fervour. After being cut off from external financial assistance, the Hamas administration in Gaza has done something similar.

In my view it is not a clever strategy to try to use these measures against the Sudan government. It is somewhat naive to suppose that they might work this time around, having been counterproductive on previous occasions.

Ana Majnun:
October 14th, 2009 
It seems to me a perfectly good strategy to use debt forgiveness as a way of leveraging NCP to continue (!?) moving to establishment of the rule of law and civil freedoms. Besides, what kind of PSRP process would condone expulsion of humanitarian relief organizations in the poorest region of the country?
Ana

Ahmed Badawi:
October 14th, 2009 
Dear Ana:
I’m sure it does seem a perfectly good strategy to you; but then again, you haven’t had to carry the burden of that strategy – as Sudanese do/have done, do you? (see post above). Sudanese don’t want to be shut out of the IMF/WB etc. It’ (the anti-debt forgiveness stance)is not in our name.

Plus, I would also encourage you to take a look a the comments by Ibrahim Adam and the IMF i listed at the end of the post, and think a little deeper about the consequences. Read the IMF report that is also linked.

My point, Ana? This issue is not a “one-trick pony”, that should be looked at – let alone linked – to the ‘issue of the moment’ (CPA, DPA, NGOS, UN, political parties, call it the flavour of the hour, if you will). This issue – debt forgiveness – is not about Sudan October 2009; the implications and consequences run much larger than that.
Ahmed Badawi

Kevin Jon Heller:
October 14th, 2009 
The author’s post assumes, of course, that Bashir’s regime would use the funds freed up by debt forgiveness for economic development — an assumption for which he offers no evidence. I do admire, however, the author’s ability to discover yet another reason to describe the regime as the victim instead of the perpetrator. Not that we should exepct anything different — after all, the author was once paid to shill for the Bashir regime. The only difference is that now he works for free.

As for Alex’s comments — do you really think you are going to convince anyone other than Bashir supporters like the post’s by arguing that the international community should continue to prop up Bashir’s regime because if they don’t (a) the regime will do business with terrorists and (b) it will become even more violent? Blackmail doesn’t seem like a very sound rationale for foreign aid.

Alex de Waal:
October 15th, 2009 
Dear Kevin,
Is the international community “propping up” the Sudan government? I don’t think so. International players are relatively marginal in the overall Sudanese political scene. The Sudan government relies overwhelmingly on its internal base, which is a mixture of its financial/patronage power, and its security institutions, enormously assisted by the weakness and disarray of its adversaries. (And one reason, in my view, why the internal opposition is so weak is its tendency to look outside for its support.)

The second point has nothing to do with blackmail. It’s not as though the Sudan government, or any other government, is a mega-version of an individual, controlled by a single will. As it happens, this government has never used this threat and I don’t believe that it would do so. But what happens when the government is cut off from western and relatively transparent sources of funds? Inevitably, its institutions turn to different ways of obtaining funds. Another source, much more accessible and attractive at the moment, is Asia. (Recall that the late 1990s campaign to get Talisman Energy to withdraw from Sudan was successful, and Asian companies filled the gap.) As for “even more violent”: with the levels of violent fatalities in Darfur hovering around the 100/month mark, those of us who have seen wars rather more violent than this, are indeed worried that these are in prospect.

The world is not divided into “for us or for Bashir”. Some of us (which includes, I strongly suspect, the majority of Sudanese) are for a more constructive political and economic engagement with Sudan, precisely because that will help shift the political centre of gravity in Sudan away from the sterile military/militaristic polarization to a civil-political process that nurtures democracy.

Ahmed Badawi:
October 15th, 2009
Dear Kevin: You missed the point. Completely.
I’m not describing “the regime as the victim”, but ordinary Sudanese people instead.
Secondly, Sudan’s unsustainable external debt is also pulling down the Government of South Sudan: it also wants to borrow money internationally, too (as it’s legally entitled to under the CPA), to butress economic development amongst its constituents. But it can’t until the foreign debt forgiveness issue is resolved.
Ahmed Badawi

Kevin Jon Heller:
October 16th, 2009
Ahmed,
As Sean Brooks points out, I didn’t miss the point at all. You are quite transparently trying to rationalize the actions of the Bashir regime by blaming the international community for not doing enough to help the government economically. And you are implying, without any evidence whatsoever, that the Bashir regime would use additional funds (beyond what it needs to purchase weapons) for economic development.
Kevin

Kevin Jon Heller:
October 16th, 2009
Alex,
It’s interesting. Whenever someone defends calling Bashir to account for his many international crimes, the response is always “anyone who replaces Bashir will be just as bad.” Whenever someone criticizes giving international aid to Bashir without preconditions, the response is always “Bashir isn’t the Sudanese government.” How convenient!
Kevin

Ahmed Badawi:
October 18th, 2009 at 9:20 am
Dear Kevin:
Thanks for your latest comment.
I, however, repeat again: you have missed the point completely by continuing to distill the foreign debt relief issue to a simple -and banal – focus on rewarding or punishing President Al-Bashir, whereas my post drew attention to the huge costs to ordinary Sudanese (Darfuris included) of the failure of international creditors to cancel Sudan’s pre-1989 odious debts.

Kevin, as for your demand of “evidence” that President Al Bashir’s “regime” would put “additional funds” from debt relief or new loans to good use, here’s a simple remedy: make the disbursement of new development finance conditional on projects that benefit the poor (i.e. use the global norm).

The tap can always be switched off if they are not.

I doubt strongly that President Al Bashir’s “regime” would object to those disbursal conditions, so why not give it a whirl – if only just for the good of conflict-affected Darfuri and southern Sudanese civilians – whose interests you claim to defend?
Best regards,
Ahmed Badawi

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