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Vol 62 No 15

Published 22nd July 2021


Between money and the military

After negotiating a new round of credits, Khartoum’s respected prime minister warns that the old guard wants to derail the transition

The latest deal for debt relief and the signing of a US$2.5 billion credit with the International Monetary Fund (IMF) are necessary but far from sufficient to keep the country's transition to a constitutional democracy on track. The deals are a milestone and accolades are due to Prime Minister Abdalla Hamdok and his team of technocrats for steering the negotiations, analysts say.

Despite the economic devastation that Hamdok and his government inherited two years ago, he says the primary challenges are political as his officials try to reform the judicial system and multitude of security agencies set up under the previous National Congress Party regime. Last month he warned that the fragmentation of the security system and the tensions between the Sudan Armed Forces, the General Intelligence Service and the Rapid Support Forces (RSF) threatened the stability of the country.

In all three factions, there are senior officers whose core aim is to derail the political transition to civil rule, instead establishing an authoritarian military-backed regime on the lines of General Abdel Fattah el Sisi's in Egypt. For those officers and their regional supporters, Sudan's economic weakness offers an opportunity to undermine the technocrats in this civil-military transitional government.

Hamdok's team has been winning international support but its local supporters are growing impatient with the torturous pace of reforms. Rampant inflation has given rise to the biggest street protests since the revolution of April 2019 (AC Vol 60 No 8, The revolution rumbles on).

The IMF ruled on 29 June that Sudan qualified for the Highly Indebted Poor Countries Initiative (HIPC), under which its debt is to be reduced from $56bn to $6bn within three years (Dispatches 18/5/21, Prime Minister Hamdok wins critical backing for economic turnaround). The Hamdok government's reforms included ending fuel subsidies, which, as in Nigeria, had benefited politically connected fuel importers but also cut prices for ordinary Sudanese. Pump prices doubled.

The IMF-backed reforms had seen the government abandon its fixed exchange rate, moving to a managed float. It was meant to end the arbitrage between the official rate set by the Central Bank of Sudan and the parallel market rate, where dollars were six times more expensive. Now, commercial banks have to trade dollars 5% above or below a new official rate, announced daily and more closely aligned with the parallel market.

While the move outlawed lucrative currency round-tripping deals, it has stoked inflation. In June, year-on-year inflation was running at 412.75%, compared with 144% a year ago, and 48% in 2019.

Military business
The next set of reforms urged on Sudan by the IMF is the disbanding or privatisation of hundreds of state firms, many controlled by the military or security departments. These, too, are coming up against vested interests.

Prime Minister Hamdok argues the military's business empire has been depressing government revenues (AC Vol 62 No 10, Transition under pressure). But Lieutenant General Abdel Fattah Burhan, chairman of the Sovereignty Council – which is military-dominated and above the cabinet in the hierarchy – insists the 'entire military economic capacity does not exceed $3 billion'. For many Sudanese these billion dollar military enterprises proved Hamdok's point and the high cost of the country's security system.

It may not be Burhan, however, from whom Hamdok has most to fear, but rather his deputy, Mohamed Hamdan Dagalo 'Hemeti'. In June, Hamdok warned of the danger of Sudan falling under the control of 'gangs and criminal groups', and said failure to reform the security services 'might lead to civil war'.

The Prime Minister did not say who represented the most serious danger, but within two weeks Hemeti ratcheted up tensions, refusing to integrate his RSF into the national army. This was an about-turn on his commitments under the power-sharing agreement that ushered in the joint civilian-military administration in August 2019, and under the Juba peace agreement signed in October last year with rebel groups (AC Vol 61 No 16, Realpolitik, with plenty of guns).

'Talk of RSF integration into the army could break up the country,' Hemeti said, arguing for the RSF's special status as a unit 'established under a law passed by an elected parliament'. The RSF has its origins in the Janjaweed militia, responsible for many of the worst atrocities in the Darfur conflict that broke out in 2003 and in which 300,000 civilians were killed and millions displaced (AC Vol 45 No 9, Mass murder).

Hemeti now has his own interests to protect – not only to maintain his political position as the Sovereignty Council's No. 2, but also personally and commercially.

An investigation into the June 2019 massacre of over a hundred protestors – who were calling for a civilian democracy, after President Omer el Beshir's ousting – could pin the blame on Hemeti's RSF (AC Vol 60 No 12, Freedom under fire). That inquiry is led by human rights lawyer Nabil Adeeb and reports to the prime minister, with the aim of filing criminal charges. Sudanese news outlet Dabanga says Adeeb has heard from more than 3,000 witnesses so far.

Although in the sights of Adeeb's investigation, Hemeti is not on the list of those charged by the International Criminal Court for war crimes and genocide in Darfur. On 28 June, Sudan's government approved the transfer of Beshir and other indictees – including the former internal affairs minister and the ex-minster for humanitarian affairs – to The Hague for trial. El Beshir has been imprisoned in Khartoum since his overthrow and is currently languishing in the city's Kober Central Prison.

The Janjaweed, in which Hemeti played a key role, have also been targeted by the ICC. On 9 July, the court ruled that a commander of thousands of Janjaweed fighters, Ali Muhammad Ali Abd Al Rahman, can be charged with crimes against humanity.

While presiding over the RSF, which may have 50,000 in its ranks and which has provided troops to fight as mercenaries in Yemen and Libya, Hemeti has also expanded his gold business. His family company Al Gunade, which controls Darfur's only gold concession, has mining interests in the South Kordofan region and a wider gold-trading network, allowing it to operate a budget independently of the government, anti-corruption group Global Witness has found.

The RSF's commercial network has dodged government attempts to control companies linked to the security forces. In April, the government published a list of state companies which, while including companies owned by the army and intelligence services, made no mention of Hemeti and the RSF's interests. The government, unconvincingly, said it couldn't find any RSF-linked companies despite public investigative reporting on its commercial network.

Even without the Hemeti-linked companies, the commercial operations tied to the security forces are octopus-like. As reported by United States-based advocacy group The Sentry, they include companies controlled by the army's Defence Industrial Systems. Notable examples are Giad, which has operated since 2002 producing cars, armoured personnel carriers and tanks, and Al Ategahat Al Mutadeda, Sudan's top meat processor. Other state-owned enterprises controlling key sectors such as fuel imports and the gold industry have operated as a law unto themselves. The think-tank Global Financial Integrity has found that over $8bn has gone missing from oil and gold export revenues controlled by the national oil company Sudapet and the Sudanese Mineral Resources Company.

Progress stalled
Other security issues loom large: stumbling peace talks between the government and rebel groups that did not sign up to the Juba Peace Agreement last year; tensions with Ethiopia, over water and disputed border areas; and unrest in Darfur. The UN-African Union Hybrid Operation in Darfur (UNAMID) wound up at the end of last year; scores have been killed in clashes since then.

Two rebel groups, both militarily strong, did not sign the Juba peace accord: the Sudan Liberation Movement-Abdel Wahid Al Nur (SLM-AW) in Darfur; and the Sudan People's Liberation Movement-North (SPLM-N) in the 'Two Areas', South Kordofan and Blue Nile states, which remained uneasily within Sudan when South Sudan became independent in 2011.

Among the two groups' preconditions for signing is that Sudan establishes a truly civilian-run administration. In a round of talks in June, the secularist SPLM-N – which has agreed a ceasefire with the government – also said devolution to the regions was a stumbling block.

Tensions with Ethiopia over the Grand Ethiopian Renaissance Dam, meanwhile, show no signs of abating. After the GERD was filled for the second year, Sudan's Ministry of Irrigation and Water Resources said on 20 July that Ethiopia was ignoring its 'legitimate interests and serious concerns'. Ethiopia plans to start electricity production at the 6,000-megawatt dam within months.

Talks led by the African Union over the GERD and Nile water resources have been going on for years, making some technical and incremental progress. But as regional tensions heighten between the three main countries, progress has stalled while the rhetoric soars.

Egypt's Foreign Minister Sameh Shoukry has said GERD poses an 'existential threat' to his country.

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