The Sudanese government’s delegation, led by Dr. Awad Ahmed Al-Jaz, the finance minister and a senior National Congress Party (NCP) leader, is here in Istanbul for the World Bank/International Monetary Fund (IMF) annual meetings. News reports from last week indicated that securing an internationally-brokered debt-relief package would be at the top of the delegation’s agenda. The dire straits of the Sudanese economy motivate this new diplomatic push.
In none of the meetings thus far that I have attended has Sudan’s appeal been publicly raised; however, we have been speaking with numerous IMF and Bank officials, policymakers, economists, and journalists about this issue. In these conversations, we have stressed that Sudan’s creditors must condition any consideration of debt-relief or debt servicing adjustments on concrete and lasting progress towards peace in Darfur, the full implementation of the Comprehensive Peace Agreement, and political and judicial reforms that fundamentally change the repressive political system in Sudan.
In addition to blocking debt-relief now for a government in Khartoum that has shown a complete disregard for protecting its own citizens, we want the international community to realize what a powerful tool it has at its disposal for peacemaking in Sudan. Leveraging debt-relief to demonstrable signs of changed behavior by the NCP-led government and concrete and lasting peace fits perfectly with the Obama Administration’s strategy of engagement with Khartoum. Continuing to refuse to write-off debts should be regarded as a current bilateral American stick that – with changed behavior from the Sudanese government – could become a potential bilateral carrot. These are the very type of “earned incentives” and “serious consequences” that Save Darfur has urged the Obama Administration to include in its still yet to be released Sudan Policy Review.
There is also legal and historical precedent for conditioning debt-relief for Sudan to long-term peace and significant structural reforms to the political system. Using the established legal principle of “odious debt” and “odious regimes,” one can make a strong argument against the international community developing a debt-relief package for a Sudanese government that has used a large portion of the $19 billion in loans accumulated by the Bashir regime to help finance civil war in South Sudan and genocide in Darfur. As the Jubilee Network USA writes:
[D]ebt is to be considered odious if the government used the money for personal purposes or to oppress the people. Moreover, in cases where borrowed money was used in ways contrary to the people’s interest, with the knowledge of the creditors, the creditors may be said to have committed a hostile act against the people. Creditors cannot legitimately expect repayment of such debts.
On a panel yesterday for the launch of a new book on debt-relief, the Norwegian Minister for International Development Erik Solheim noted that dealing with illegitimate debt is an important issue for the international community to address. In 2006, Norway became the first developed country ever to cancel unilaterally debt claims that it acknowledged were illegitimate from five countries (Ecuador, Egypt, Jamaica, Peru, and Sierra Leone). Notably, in taking this decision, Norway refused to write-off similar claims it held on Sudan and Burma – stating that they would consider write-off only after the “situations” changed in those countries.
We can also look to two other countries to contextualize Sudan’s current debt-relief appeals. Sudan, today, accounts for 75% of the $2.09 billion in arrears (past due payments) owed to the IMF, World Bank, and African Development Bank. In 2007, of the 41 countries eligible for the Highly Indebted Poor Countries (HIPC) Initiative, only Liberia and Somalia possessed similar arrears to the IMF that blocked their full participation in the initiative. On this situation, the IMF wrote:
Countries in arrears are all experiencing some form of crisis, ranging from violent conflict to serious governance problems and political paralysis. Typically, these crises are of long duration…Inflation tends to be far higher, and the external debt and fiscal balance ratios tend to be worse.
Of course, Liberians in 2007 were actually well on their way to rebuilding their country after its long and costly civil war. The next year the U.S. and the international community supported the new democratic government of President Ellen Johnson-Sirleaf by providing it bridge loans so that it could clear its IMF arrears and reach the decision point of the HIPC Initiative. The tragedy in Somalia though remains in perpetual chaos and, therefore, it’s still impossible for the international community to even begin a conversation on debt-relief.
The Sudanese government in Khartoum currently though has a choice: it can choose to go the direction of Liberia by ending its conflict and rebuilding its economy to serve the interests of its people, or it can choose the direction of Somalia and perpetuate its conflict for years to come and give Sudanese citizens no hope of climbing out of wretched poverty with the help of the international community. President Obama and his administration should make this stark choice for Khartoum abundantly clear. To that end, he should lead an international coalition of Sudan’s creditors to deal simultaneously with Sudan’s economic challenges and human rights abuses. Providing debt-relief to Sudan before its leaders demonstrate a proven commitment to peace will not serve the interests of the Sudanese people, but rather give more political legitimacy and further financial resources to the repressive regime in Khartoum.
This is the message that we are delivering in Istanbul. I will write more soon…
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
