Time to Take Away Sudan's Credit Card

Omar al-Bashir's brutal Sudanese regime certainly has nerve. On Dec. 14, as Bashir's National Congress Party (NCP) thugs violently suppressed the second peaceful demonstration by opposition groups in seven days, the Sudanese minister of finance met with the U.S. Special Envoy to Sudan Scott Gration and urged the United States to lift sanctions on Khartoum and cancel Sudan's foreign debt -- in other words, bailing out the government that brought you such atrocities as Darfur and the decades-long civil war with South Sudan that now ominously threatens to reignite.

While no Western country is rushing to hand out money to Bashir, the international community has disagreed over how to persuade Sudan to end its genocidal ways, and the United States is still the only country to impose sanctions. One unlooked-for upside of the global financial crisis may be that it offers new economic leverage with Khartoum. Following the crash, Sudan now holds roughly $36 billion in external sovereign debt that it is struggling to repay. This debt gives the rest of the world a new opportunity to finally affect the course of Sudanese political reform and even end the conflicts in Darfur and South Sudan, if Western countries are willing to act boldly.

For much of the last decade, Bashir and the NCP, who were sitting on Sudan's rich oil reserves, could afford to ignore their mounting debt. A flood of foreign direct investment and new loans contracted with China, the Gulf Arab states, and India financed a booming resource economy and made Sudan careless about payments to the International Monetary Fund (IMF), Paris Club members, and other debtors. The existence of such a steady stream of income has also enabled Sudan's hubris toward the international community on issues like Darfur.

But the global recession has rocked Sudan's fragile economy, and the good times are over. The large drop in oil prices over the last year has sharply lowered government revenues. The Sudanese government compounded the problem by defending the exchange rate of the Sudanese pound in order to prevent a rise in domestic food and import prices. This unsound policy quickly became unsustainable as the Sudanese government began to run out of foreign reserves and found foreign capital more difficult to acquire, because all of its creditors were also affected by the crisis.

The crash subsequently led the Sudanese government to return to the international community with an urgent appeal for debt relief. This summer, it asked the IMF to push forward a debt-relief package provided to other countries in similar financial circumstances and even convinced Japan to write off a small portion of its debt. Securing a debt relief package was at the top of the Sudanese delegation's agenda at the recent IMF/World Bank annual meetings in Turkey, and now -- for the first time publicly -- it has raised the issue with Obama's envoy to Sudan. The Sudanese newspaper Al-Sahafa reported last Tuesday that Sudanese Finance Minister Awad al-Jaz will travel to Washington in January to speak again with Gration.

Sudan's aggressive international lobbying must be put in its appropriate context. Its debt -- the second most in Africa -- has subsidized the government's war and genocide against its own people. Between 2001 and 2008, some of the bloodiest years in Sudan, the regime contracted more than $3.4 billion in new loans from international lenders. Although Khartoum claimed to use these loans to build up the oil sector and public infrastructure, it is impossible -- given the scant public information on the government's budget -- to disconnect this financing with the revenues available for war-making. Even from the government's limited reporting, we know that Sudan imported weapons worth $76.3 million between 2004 and 2006. In addition, it has purchased in the last five years 20 advanced fighter aircraft and 26 attack helicopters, which most experts conservatively estimate carry a price tag of hundreds of millions of dollars.

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