VZCZCXYZ0038
OO RUEHWEB

DE RUEHKH #1473/01 2611507
ZNR UUUUU ZZH
O 181507Z SEP 07
FM AMEMBASSY KHARTOUM
TO SECSTATE WASHDC IMMEDIATE 8562

UNCLAS KHARTOUM 001473 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PLEASE PASS TREASURY 
DEPARTMENT FOR AF A/S FRAZER, SE NATSOIS, AF/SPG AND 
EEB/ESC/ESP (KLEIN) 
TREASURY FOR OFAC AND OIA 
NSC FOR PITTERMAN AND HUDSON 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PREL PGOV SU
SUBJECT: SOUTHERN SUDAN:  LETTER TO SECRETARY RICE ON THE 
IMPACT OF U.S. SANCTIONS 
 
 ¶1.  (U) Summary:  A letter from Government of Southern Sudan 
(GoSS) Finance Minister Mawien to Secretary Rice outlines 
objectives for the impending GoSS visit to Washington to 
explore ways to mitigate the impact of U.S. economic 
sanctions on Southern Sudan.  End Summary. 
 
¶2.  (U) On the eve of the departure of a high-level GoSS 
delegation to Washington to discuss the effect of U.S. 
economic sanctions on Southern Sudan and to explore possible 
measures to mitigate these effects, the GoSS has delivered a 
letter from Minister of Finance and Economic Planning Kuol 
Athian Mawien to Secretary Rice (text in para. 4), outlining 
GoSS concerns, along with four proposed measures to mitigate 
the sanctions impact.  The letter contends that U.S. 
sanctions on the Khartoum government are having the 
unintended consequence of constraining GoSS revenues and of 
discouraging U.S. private investment in Southern Sudan.  It 
also charges that Khartoum uses sanctions as an excuse to 
underfund development projects in the South, claiming that 
sanctions are reducing revenues.  The letter proposes:  1. 
that arrangements be made to transfer the GoSS share of 
Sudan,s oil revenues through a U.S. bank, 2. that similar 
arrangements be made for the transfer of grants to the GoSS, 
3 &legal and other necessary arrangements8 be made for 
correspondent banking between U.S. and Southern Sudanese 
banks, and 4. exempting U.S. firms investing in Southern 
Sudan from U.S. sanctions. 
 
¶3.  (SBU) Receipt of the letter follows a September 13 
meeting in Juba between Acting Consul General Juba and Acting 
Embassy PolEcon Chief, and members of the delegation going to 
Washington, including Finance Minister Mawien and GoSS 
Minister of the Presidential Affairs Luka Biong Deng.  At 
this meeting, Minister Mawien explained that GoSS oil 
revenues under the Comprehensive Peace Agreement are 
transferred to Juba from the Central Bank of Sudan via a GoSS 
account with a commercial bank in Bahrain.  Mawien said that 
the Bahraini bank is under pressure for handling dollar 
transactions involving Sudan and the GoSS fears that the bank 
may soon close the account.  Mawien did not elaborate on the 
source or nature of the pressure on the Bahraini bank. 
Emboffs suggested that the delegation might explore with 
Treasury the possibility of an OFAC license for the bank to 
specifically transfer oil revenues to the GoSS.  Deng 
suggested that a U.S. bank might be more comfortable in 
dealing with OFAC than would a foreign bank.  Mawien and Deng 
also asserted more generally that the perception that all of 
Sudan is under U.S. sanctions discourages U.S. private 
investment in Southern Sudan, as well as interest by foreign 
banks in setting up operations there. 
 
¶4.  (U) Begin text: 
 
17 SEPTEMBER 2007 
GOVERNMENT OF SOUTHERN SUDAN 
MINISTRY OF FINANCE and ECONOMIC PLANNING 
OFFICE OF THE MINISTER 
 
HE Dr Condoleezza Rice, 
Secretary of State, 
 
SIPDIS 
U.S. Department of State 
2201 C Street NW 
Washington, DC 20520, 
United States of America 
 
 
Dear Secretary Rice, 
 
Re: The Impact of Sanctions and US-Sudan Economic Relations 
 
I am profoundly delighted to write to you and share some 
thoughts on these pertinent and pressing issues of our time 
in relation to how best to manage, deepen and broaden 
US-Sudan economic relations while ensuring the desired social 
transformation of Sudan through the effective implementation 
of the Comprehensive Peace Agreement (CPA). 
 
I also believe that we need to think and plan ahead on how 
best we shall lay solid and sustainable foundations that 
shall not only ensure the realisation of lasting peace in 
Sudan and our region but also the sustainability of 
successful US-Sudan economic relations as inspired and shaped 
by our shared sentiments, strategic visions and interests. 
 
To achieve this we need to get the analysis right as, we 
formulate policies and strategies on such sound 
 
evidence-based and knowledge-based approaches through our 
instruments of government and the best scientific tools 
available to us. 
 
US Sanctions on Sudan 
 
Without a doubt the deep wisdom and rationale of US sanctions 
on Sudan remain admirable in as much as they effectively 
served their intended purposes in bringing about change in 
Sudan until the successful conclusion of the CPA. The people 
of Southern Sudan and other marginalized areas of Sudan 
remain grateful for the principled stance of the people and 
Government of the United States of America. 
 
Certainly, there are well founded and plausible reasons for 
targeted sanctions to remain in force against Sudan 
especially as responses to the appalling humanitarian 
tragedies in Darfur and other failures concerned with 
implementing the CPA, DPA and ESPA. 
 
As a matter of principle, the people and Government of 
Southern Sudan uphold and very much welcome such principled 
stance and strategies. However, given the latest changing 
circumstances, new ways are to be found for such principled 
objectives not to stand on the way of the Government of 
Southern Sudan to deliver its mandate and services to its 
people and also on the other hand on its historical role and 
responsibilities towards the social and political 
transformation of the Sudan as provided for under the CPA. 
 
The people and Government of Southern Sudan strongly believe 
that there are innovative and imaginative solutions that can 
be explored and adopted by us all in order to strike the best 
possible balance between these competing and at times 
seemingly contradictory policy concerns and the requisite 
strategies to realising them. 
 
The continuation of US sanctions on Sudan as they stand at 
present shall seriously harm the people and Government of 
Southern Sudan even more than it would the NCP-led Government 
of National Unity. This shall have serious implications at 
every level. 
 
The NCP and its networks have options and sources which are 
not available to the people and Government of Southern Sudan. 
Therefore the NCP shall have all the excuses for not meeting 
with its moral and political commitments to implementing the 
CPA, apart from the other negative ramifications on peace and 
security throughout the country. 
 
The NCP led Government of National Unity is deliberately not 
making any development projects in Southern Sudan under the 
pretext that there are no resources owing to the US 
sanctions, while at the same time concentrating development 
activities in selected areas of northern Sudan where it deems 
its political support to be greatest. 
 
On the immediate, medium and long term, US sanctions as they 
stand at present may potentially provide the basis for the 
NCP to pursue its project of not honouring the CPA and also 
considerably undermine or even reversing national, regional 
and international efforts for finding sustainable peaceful 
solutions for Sudan's intractable difficulties. 
 
GoSS Proposals on the Way Forward 
 
It is all a matter of political will and how far imaginative, 
innovative and proactive we choose to be from our respective 
positions while working within existing international 
legitimacy and legality as well as the legitimacy and 
legality of our respective countries. 
 
GoSS proposals are therefore made within the framework of 
international and Sudan existing legitimacy and legality as 
provided for by the CPA and interim national and Southern 
Sudan constitutions. 
 
In view of the above, GoSS therefore proposes the following 
and urgent immediately needed specific requirements: 
 
¶1.   The share of GoSS of oil revenue is being channelled 
through banks in the Middle East, which are subjected to US 
sanctions. GoSS seeks to have its share of oil revenue to be 
paid through a US based commercial Bank, which shall in due 
course under these proposals have branches in Southern Sudan. 
 
¶2. There are grants made to Southern Sudan which under 
existing sanction regimes are difficult to transfer, it would 
be better to make such transfers through the proposed 
solution of having GoSS accounts with a US based commercial 
bank with a branch in Southern Sudan. 
 
¶3. Creating legal and other necessary arrangements for South 
Sudanese banks to have close working relations with 
corresponding bank's within the US. 
 
¶4. There are many companies, especially US based companies, 
which are willing and ready to invest in Southern Sudan and 
are unable to do so due to US sanctions against Sudan from 
which they are to be exempt. 
 
The immediate, medium and long term objectives and strategies 
are as follows: 
 
¶1. Working out clear political, policy, institutional and 
operational frameworks and structures for exempting Southern 
Sudan from US sanctions, with agreed sets of measures to 
safeguard against possible infringements. 
 
¶2. Working out clear legal frameworks and strategies for 
targeted sanctions against the negative elements in Sudan in 
ways that shall further strengthen the prospects for 
implementing the CPA and at the same time enable the positive 
elements of social and political change in Sudan to 
successfully deliver their respective mandates. 
 
¶3. Exploring areas for closer engagements on deepening 
economic and bilateral relations that shall further enhance, 
deepen and enable GoSS and others in Sudan to pursue their 
mission of transforming Sudan in line with established 
principles. 
 
¶4. Accelerating existing and explore new areas for enhancing 
the capabilities of GoSS on public expenditure management, 
fiscal discipline and economic management. 
 
¶5. Providing for major US Banks to serve in Southern Sudan 
under US laws, Bank of Southern Sudan regulations and the 
agreed bilateral agreements on these regards. 
 
¶6. Creating political, legal and financial incentives for 
greater and deeper relations between US companies and 
Southern Sudanese companies, especially in agriculture and 
agro-business industries that can immediately impact on 
peoples' lives. 
 
¶7. Creating most favoured trading relations with the US for 
Southern Sudanese suppliers to conduct closer business 
relations with the United States of America as provided for 
within the African Growth and Opportunity Act (AGOA) and 
other related frameworks. 
 
¶8. Creating synergies for local, national and regional 
safeguards for growing economic relations and investments 
between the US and Southern Sudan. 
 
¶9. Resolving existing problems and bottlenecks with how GoSS 
financial affairs are being managed at present especially in 
respect of the World Bank and MTDF etc. 
 
¶10. Developing bilateral research and policy analysis 
activities on economic and financial relations as well as 
associated areas. 
 
¶11. Exploring other areas of mutual strategic and other 
interests. 
 
The people and Government of Southern Sudan remain touched 
and moved by the depth and commitment of the people and 
Government of the United States of America and indeed their 
moral, intellectual, political and material capital being 
invested in furtherance of the values of liberty, democracy, 
human rights, justice and the rule of law. 
 
On their part the people and Government of Southern Sudan 
remain committed to honouring such consistent and principled 
commitments in this and future generations to come. Hence 
these proposals on how we can think and plan together on the 
way forward. 
 
Once the policy decisions are made, we look forward for us to 
engage our respective technical and operational teams at the 
 
earliest opportunities to proceed with the agreed policies, 
strategies and solutions as shall be determined in due course. 
 
Given the urgency of these matters raised, we look forward to 
your learned responses at your earliest possible opportunity. 
 
Yours sincerely, 
 
 
Kuol Athian Mawien 
Minister of Finance and Economic Planning, 
 
 
Government of Southern Sudan 
FERNANDEZ