US Sanctions on Sudan, Immediate Economic Impact Minimal

Diplomats and experts argue Sudan’s economy has long operated in isolation, but warn new sanctions could complicate international financial dealings.

Sudanese diplomats and economists have downplayed the immediate economic impact of new US sanctions imposed over allegations that the Sudanese army used chemical weapons during its conflict with the paramilitary Rapid Support Forces (RSF).

The sanctions, which came into effect on Friday June 27, target military and dual-use exports, foreign aid under the US Foreign Assistance Act, arms sales, government financing, and exports of US goods and technology to Sudan.

No Substantial US-Sudan Trade Ties

Sudan’s former chargé d’affaires in Washington, Ambassador Muawiya Osman Khalid, said the immediate effect of the sanctions would be “limited due to the absence of meaningful trade or economic exchange between Sudan and the United States for decades.”

Ambassador Abdel Mahmoud Abdel Halim, Sudan’s former envoy to the United Nations, said that while the sanctions target exports, finance, arms, and technology, “these sectors are either weak or non-existent in current bilateral relations.” He cautioned, however, against underestimating the implications, citing “the interconnectedness of global economies with the US.”

Chemical Weapons Allegation Dismissed by Khartoum

The US State Department said the sanctions follow accusations that the Sudanese army used chemical weapons during the 2023 civil conflict. A spokesperson accused the Sudanese military of breaching international norms. The Sudanese government has rejected the claim, calling it false and politically motivated.

Hopes for Renewed Engagement Disrupted

Adel Abdel Aziz, former director at Sudan’s Ministry of Finance, said the sanctions mark a “rupture in the course of renewed engagement” that was anticipated following the appointment of international law veteran Kamal Idris as prime minister. He noted that the timing disrupts efforts to restore economic dialogue with the West.

Exemptions Still Possible

Although the sanctions reintroduce restrictions on US trade with Sudan, Ambassador Muawiya said there is room for exemptions. “If a US company applies to the Treasury Department’s Office of Foreign Assets Control (OFAC) for a licence to export to Sudan, it may be granted if deemed in the national interest,” he said.

He added that since the lifting of broad economic sanctions in 2017, “actual commercial activity never resumed in any meaningful way,” due to persistent reputational and risk concerns among American businesses.

Washington’s First Post-War Sanctions

A Sudanese business executive, speaking on condition of anonymity, said that while the sanctions may not directly affect key economic sectors, “they are symbolically troubling.” He warned that these are the first state-level sanctions applied to Sudan since the war began in April 2023 and could lay the groundwork for expanded restrictions.

He added that international banks, especially in Europe, might “over-comply and suspend dealings with Sudan out of caution, even if not legally required.”

Sudan’s gum arabic exports, valued at under $200 million annually, are often cited as a key export to the US, but analysts note that American firms have adopted synthetic alternatives, reducing dependence.

Aid Freeze and Isolation from International Finance

Following the October 2021 military takeover by General Abdel Fattah al-Burhan, the US suspended $700 million in emergency aid and paused cooperation with Sudan’s transitional government.

Sudan’s progress toward debt relief under the Heavily Indebted Poor Countries (HIPC) initiative was also halted. International lenders such as the IMF and World Bank, along with Western nations, have stated they will only resume assistance once a civilian-led government is in place.

Adel Abdel Aziz said that Kamal Idris’s nomination as prime minister and efforts to appoint a technocratic cabinet were meant to revive international cooperation. “But the announcement of new sanctions has cut that pathway,” he said.

He urged the government to “develop a new economic diplomacy focused on Eastern nations and other friendly states.”

Moral Burden Amid Reconstruction

Ambassador Abdel Mahmoud said the sanctions impose not just an economic cost, but a “moral and humanitarian burden,” as Sudan struggles with post-war reconstruction. He condemned the chemical weapons accusation as “a form of political blackmail” reminiscent of the 1997 sanctions, which were only lifted two decades later.

A Sanctioned Past and an Uncertain Future

Economist Amar Bashir, a food security official at the Ministry of Agriculture, said Sudan has experience navigating sanctions. “Periods of sanctions ironically led to economic diversification,” he said, noting that Sudan had shifted focus to markets in Asia and the Middle East.

Despite that, Sudan’s economic outlook remains fragile. Analysts warn that even limited sanctions risk chilling what few remaining foreign financial relationships the country has, particularly as banks and multilateral institutions adjust their risk assessments.

Reporting by Awad Mustafa