My colleague Andrea and I stepped off the plane in Istanbul about 36 hours ago. We are here in the commercial capital of Turkey and one of the symbolic bridges between the East and the West to attend the World Bank and International Monetary Fund’s annual meetings.
As neither of us proclaims to have any ground-breaking advice for world leaders as they set out to rebuild the global financial and economic infrastructure after the so-called Great Recession, why are we here? Well, it’s certainly not to rub shoulders with U.S. Treasury Secretary Timothy Geithner, although we did see him and the American delegation up-close and personal today. Instead, we are here as always to try to focus the world’s attention on peacemaking in Sudan.
But what possible role can the gathered finance ministers and international economists play in influencing politics and negotiations in Sudan? In the next few days, I will write on how the Obama Administration and international community should condition debt relief to peace in Sudan; how accountability in Sudan’s oil sector can help avoid a return to civil war; and how the international community can help build responsible state-capacity in conflict-affected countries like Sudan.
Before I do, it’s necessary to set the stage. How in fact has Sudan been affected by the current global economic crisis? A recent IMF reports highlights in detail the immense and imminent economic challenges facing the Sudanese government. In short, the large drop in oil prices over the last year has sharply lowered government revenues – perhaps cutting government revenues up to 50%. The Sudanese central bank has compounded the problem by defending the exchange rate in order to prevent a rise in domestic food and import prices. This policy intervention drained Sudan of its foreign reserves which it had accumulated during the Khartoum-boom of the last decade. What’s more, the Sudanese government cannot access much emergency foreign capital because of its already precarious debt burden position – it owes international creditors over $34 billion.
The IMF has sought to help many fragile and vulnerable countries overcome similar shocks brought on by the financial crisis that began last September on Wall Street. Sudan has not been eligible for such relief because it currently owes the fund, World Bank, and African Development Bank almost $1.5 billion in arrears – this represent roughly 75% of all past due payments by member states to the IMF. So what will Khartoum do? They invited the IMF to put together a Staff Monitored Program to assist in reforming various macroeconomic policies. In committing to implementing IMF reforms, Khartoum also asked the IMF “to take concrete action on debt relief for Sudan.” They followed up this request this week by sending a delegation to Istanbul to lobby for such assistance.
One of our objectives here is to contextualize this appeal from Khartoum – reminding the delegates and officials of how President Omar al-Bashir and the National Congress Party irresponsibly and egregiously used loans over the last twenty years to wage war and genocide against their own people. Instead, we are calling on the international community to condition support for Sudan’s troubled economy on peace and human rights for all Sudanese.
By no means do we want Sudan’s economy or the country to implode. A BBC World Debate that we attended this morning on “The Global Crisis and Policy Responses” made me reflect on the troubling state of Sudan’s economy and political system. An impressive group debated whether the world economy has begun to recover and the long-term consequences of bailing out financial institutions that were considered “too big to fail.” While world leaders immediately came to the rescue of investment banks and insurance companies to avoid the total collapse of the financial system, they still refuse to recognize Sudan as “too big to fail.” The international community continues to whistle past the graveyard as the country hurdles toward perhaps a new explosive wave of violence in 2010 or 2011 that could set the whole region aflame.
Re-ignition of conflict would be catastrophic for Sudan’s people and the entire region. Full-scale war and descent into chaos would also represent a dramatic and costly failure for the United States and the international community. Refugee flows and violence would upset the tenuous stability in Chad, Uganda, Kenya, the Central African Republic and Ethiopia – and gravely harm Egypt’s national security. The potential human costs to such a regional conflagration are incalculable.
Avoiding this catastrophe is the challenge for Sudanese leaders and the international community. The world must help the Sudanese reach durable solutions to end their interlocking political crises, while at the same supporting human rights and helping build the foundations for democracy and sustainable development. With Sudan’s economy on the brink, the IMF and World Bank certainly have a role to play.
So stay tuned for more blogging from Istanbul. We are heading over to the convention center now for a press briefing on the status of the Highly Indebted Poor Countries (HPIC) Initiative and a session on how resource-rich countries (like Sudan) have dealt with the crisis.
The opinions expressed here are those of the author(s) and do not necessarily reflect the position of the Save Darfur Coalition.
Tags: Darfur, debt relief, IMF, Istanbul, Sudan, Sudan's Debt, war, World Bank
