Sudan's terrorism listing

This gradual normalisation of relations increases the likelihood that Sudan will be removed from the US State Sponsors of Terrorism (SST) list, facilitating improved relations with South Sudan and diversifying access to much-needed external financing.

• The US will probably remove Sudan from the SST before end-December, owing to sustained progress in counter-terrorism co-operation and on regional security. Sudan was originally listed on the SST in 1993 due to the country's support for Islamist militants, including Al-Qaeda. Since then, economic pressures have gradually normalised Sudan's relations with the Gulf Co-operation Council and the US. This resulted in US economic sanctions being removed on 6 October, owing to improved counter-terrorism and intelligence sharing, dialogue with anti-government forces, and cutting ties with Iran. Sudan's continued status as a state sponsor of terrorism was probably intended to encourage progress on regional security co-operation, particularly with South Sudan and Chad. Progress on these initiatives has accelerated over the last month, culminating in talks between the Sudanese and South Sudanese presidents on 3 November, with the aim of establishing a joint border force. Furthermore, bilateral talks scheduled to be concluded between the US and Sudan in late November coincide with a 45 days' notice requirement for the US president to produce a report for Congress that suggests Sudan has ceased support for terrorist activities over the past six months. The Department of State's 2016 Country Terrorism Report confirmed that there was no evidence of the Sudanese government supporting or tolerating terrorism during 2016. The US president's report would be virtually identical to that already produced in support of the October economic sanctions removal, suggesting the ground work has already been put in place for Sudan's delisting from the SST. US President Donald Trump also made the removal of economic sanctions unconditional, suggesting his administration does not intend to embark on another review process.
• US restrictions on arms exports, foreign aid, and trade in technologies would be lifted, and the US would probably support Sudanese efforts to obtain multilateral financing. Congress need not be notified of a delisting in advance, as the US president can issue a presidential waiver to remove licence requirements and unblock arms exports, foreign aid, and trade in prohibited technologies. A licence from the US Office of Foreign Assets Control would also not be required when exporting agricultural commodities to Sudan. Furthermore, the US would be able to support Sudan's negotiations with the World Bank and the International Monetary Fund. Congress can block the presidential waiver. However, the loose definition of "terrorism" incorporated into statutes comprising the SST limits the avenues available for the opposition religious right to achieve this.
• Although Sudan's removal would simplify compliance processes for Western banks, related-party transactions would grow more slowly due to the continuing risks of money laundering and persistence of targeted sanctions against entities and individuals implicated in human rights abuses during the Darfur conflict. The lifting of sanctions in October already allows US businesses to operate in Sudan, and contributes to easing the technical obstacles necessary for Sudan's achieving accession to the World Trade Organization (WTO). Targeted sanctions relating to human rights abuses in the Darfur conflict are maintained and will apply to a number of entities and individuals, particularly in the gold mining sector. Previous sanctions violations have resulted in hefty penalties. For instance, BNP Paribas pleaded guilty to processing transactions between Sudanese entities and satellite banks in the US in 2014, resulting in the payment of nearly USD8.9 billion in fines.

Indicators of changing risk environment

• US officials publicly support Sudan's bid for WTO accession, indicating a report on Sudan's status as a state sponsor of terrorism has already been initiated.
• The US State Department uncovers more recent evidence of North Korean weapons exports to Sudanese government-affiliated defence manufactures, providing the US Congress with credible evidence to block Sudan's delisting, delaying this into mid-2018.
• Sudan and South Sudan fail to reach agreement on border security and/or resuming oil production at the Unity fields, weakening the White House's leverage to delist Sudan.
• Relations between Chad and Sudan deteriorate over Sudanese plans to forcibly disarm militia forces in Darfur region, resulting in the US postponing the delisting until mid-2018 in order to maintain its leverage in achieving the objective of improving security along Libya's southern border.

Chris Suckling is a Senior Analyst, Country Risk - Sub-Saharan Africa at IHS Markit
Posted 10 November 2017