Sudan isolation mounts

2014-03-14 13:14

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Khartoum - Major European and Saudi banks have stopped dealing with Sudan, diplomatic and other sources say, adding to the sanctions-hit country's isolation and further straining its indebted, cash-starved economy.

While Khartoum blames increased "pressure" from a US trade embargo first imposed 17 years ago, a US official said there had been no change in policy from Washington.

The move by the European banks appears to reflect an increasingly cautious attitude by financial institutions which do not want to risk being found in violation of US sanctions, a Western diplomat said.

"I think this is something actually mushrooming," he said of the risk aversion.

Germany's Commerzbank was the latest to sever its Sudan connection, according to diplomats.

The bank had no comment when reached by AFP.

In 2012, the British banks HSBC and Standard Chartered were fined $1.92bn and $667m respectively for violations that included sanction breaches with Iran and Sudan.

That same year, Dutch bank ING agreed to pay $619m to settle US government accusations that it conducted banned transactions involving Sudan and other countries.

In the latest investigation, US authorities are probing the French banks Societe Generale, BNP Paribas and Credit Agricole for alleged embezzlement and violation of sanctions against countries like Iran and Sudan, a source close to the matter said last week.

Private and government transactions

The European Union itself has no embargo against Sudan, whose government seized power 25 years ago in an Islamist-backed coup.

But European banks with US branches or business "are closing any Sudanese accounts and won't even process payments from Sudan", the diplomat said.

This affects private and government transactions.

A local banker, who asked not to be identified, said that starting this month Saudi banks too had stopped dealing with the African nation.

This is economically far more significant for Sudan than the European move.

"Most of the accounts or money going out of Sudan, it's completely frozen," the banker said.

Sudan says hundreds of thousands of its nationals work in Saudi Arabia, earning money to send home. The kingdom is also a key exporter to Sudan.

The banker said that although sanctions have long been in place, they are being more strictly implemented now.

"So they are putting more pressure," he said.

The United States imposed a trade embargo on Sudan in 1997 over accusations that included human rights violations.

Sanctions exemptions are possible in some cases such as non-commercial personal remittances or agricultural equipment.

Internal procedures

For Saudi Arabia, strained political relations over Iran could be a factor in the banks' decision, the Western diplomat said.

While Riyadh has cool relations with Tehran, Khartoum has tried to balance ties between Saudi Arabia and Iran.

The ending of dealings with Sudanese banks by some European and Saudi financial institutions related to their own "internal procedures", the Central Bank of Sudan said in a statement carried by the official SUNA news agency.

Information Minister Ahmed Bilal Osman denied any political reason for the Saudi action, but said American pressure "is also toward the banks" now.

"It is actually against the people of Sudan," he told AFP. "I think this is not at all ethical."

A US official said such accusations are nothing new.

"We have not changed or modified our sanctions policy or implementation practice," said the official, who declined to be named.

The banks' action further complicates Sudan's economic difficulties, which have mounted since 2011 when South Sudan separated with the bulk of the united country's oil production.

Hard currency is in short supply, the Sudanese pound has weakened and inflation has mounted, creating social tensions which exploded in deadly street protests last September.

Osman said there are still "some countries" which can deal with Sudan.

"But we find difficulty, yes," he said.

"It costs more but we can find a way. We have to live."

Read more on:    sudan  |  east africa
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