The Impact of Lifting U.S. Sanctions on the Sudanese Economy

Over 25 years have passed since the U.S. imposed sanctions and restrictions on Sudan. During this time, Sudan was deprived of numerous rights, benefits, and opportunities. Many sectors of work and production collapsed, and Sudanese people lost access to basic needs due to the embargo. However, today, on Tuesday, the White House announced the lifting of U.S. trade restrictions on all transactions between Sudan and America.

A presidential memo from the U.S. President, in its fifth paragraph, refers to the lifting of sanctions on Sudan that were imposed under U.S. human trafficking laws. This will allow Sudan, along with other countries, to continue receiving developmental aid and international health projects as these align with U.S. law or enhance America’s national interest.

This will have a significantly positive impact on Sudan’s economy and, in the long run, on its development. This is expected to contribute to increased production, productivity, and the export of Sudanese products to America, such as gold, uranium, gum arabic, cotton, leather, textiles, and agricultural and forest products.

The positive impact on Sudan will be vast and can be seen in various aspects including political, economic, social, cultural, and developmental factors. This decision fosters confidence and sustainability in the supply chain of information and communication technology and software, which were previously restricted by the U.S. for countries it deemed hostile, including Sudan.

The Sudanese economy has faced tremendous challenges, especially after South Sudan’s secession in July 2011, in addition to the U.S. economic sanctions imposed for nearly 20 years, followed by the recent war with the Rapid Support Forces rebellion. The new U.S. decision is expected to have several positive effects on Sudan’s economy, including:

1. **Foreign Currency Liquidity: One of the most crucial elements of the U.S. decision is the unfreezing of Sudanese financial assets held in the United States, valued at $30 billion according to the U.S. Office of Foreign Assets Control (OFAC). The availability of these funds, along with the lifting of restrictions on Sudan’s financial and banking transactions with the global economy, will provide significant foreign currency liquidity to the country, thereby supporting its foreign reserves.

   This influx of foreign currency liquidity is expected to stabilize Sudan’s foreign exchange market.

2. **Investment Inflows: The lifting of trade restrictions will undoubtedly enhance confidence in the Sudanese economy gradually, leading to a positive reflection on capital flows in the country. Both local and foreign companies, which previously faced difficulties, particularly in banking interactions with global banks, including American ones, will benefit. Consequently, the removal of financial and banking restrictions from abroad will likely double the flow of foreign investments into the Sudanese market, especially from Russian and Chinese companies that have shown interest in the agricultural and mining sectors over the past two years.

3. **Trade Movement: Another significant gain from lifting trade restrictions is the enhancement of trade exchanges with the outside world. The U.S. decision will reopen access for Sudanese exports to enter external markets, including the American market, and allow Sudan to import essential goods to rehabilitate various economic sectors. In the past, many sectors, particularly industrial and services such as aviation, suffered from a lack of necessary investments due to restrictions on importing goods, equipment, and spare parts needed for rehabilitation.

4. **Economic Diversification: There is no doubt that lifting trade restrictions will remove many procedural and legislative barriers facing the private sector in Sudan, which the government relies on to support its economic diversification plans. Sudan aspires to double its gold production and agricultural products such as sugar, cotton, and oils. These ambitions are part of Sudan’s broader strategy to boost exports and increase financial revenues.

The realization of economic benefits from lifting U.S. sanctions depends on several external and internal factors, including:

– **Economic Reforms: The U.S. decision coincides with ongoing economic and financial reforms in Sudan, including the rationalization of subsidies for energy and electricity. These reforms will gradually enhance the country’s financial stability. The government must continue its efforts to improve the investment climate, which still faces many obstacles.

– **Political Stability: Resolving internal conflicts, whether in Darfur or the southern and eastern states, is also crucial for stabilizing the economy and attracting foreign investment. Alongside the economic and reform measures, the Sudanese government must persist in its efforts to settle internal disputes across the country.

In conclusion, the U.S. decision provides a solid foundation for Sudan to move toward economic stability and diversification. However, achieving this will require the government to continue necessary economic reforms to support growth and improve the investment environment through various political, security, and economic measures.