VZCZCXYZ0000
PP RUEHWEB

DE RUEHKH #1955 3450731
ZNR UUUUU ZZH
P 110731Z DEC 07
FM AMEMBASSY KHARTOUM
TO SECSTATE WASHDC PRIORITY 9492

UNCLAS KHARTOUM 001955 
 
SIPDIS 
 
DEPT FOR AF/SPG, AF/EPS, EB/IFD, AND EB/ESC 
DEPT PLS PASS USAID FOR AFR, AND ALSO PASS USAID 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV EFIN ECON EAID SU
SUBJECT: U.S. SANCTIONS HURT SUDAN'S ECONOMY SAY CONFERENCE 
PARTICIPANTS 
 
¶1.  (U) SUMMARY:  On December 10, 2007 in a conference entitled 
"Sudan in a Global Economy," almost all speakers stated that U.S. 
sanctions have hurt the Sudanese economy.  Presenters claimed that 
U.S. sanctions have resulted in a shortage of medical supplies, 
prevented the economy from fully liberalizing, and aimed at keeping 
Sudan and Africa in the dark ages.  END SUMMARY. 
 
¶2.  (U)  Mamoun Gamal, the Managing Director of CityPharmp 
Pharmaceutical Industries in Khartoum, noted that U.S. sanctions 
have significantly affected his business, and claimed that sanctions 
caused a shortage of medical supplies in Sudan from May to September 
¶2007.  Gamal mentioned that he was unable to obtain surgical 
sutures, bandages, and diabetes testing machines, specifically 
naming Johnson & Johnson as an example of one American company that 
he has not been able to access.  Gamal said he is aware that 
agricultural commodities and medical supplies are eligible to 
receive special exemption licenses from the Office of Foreign Assets 
Control (OFAC), U.S. Department of Treasury.  However, according to 
Gamal, many U.S. firms want his Sudanese company to cover legal fees 
associated with the OFAC application process, making these 
procedures cost prohibitive.  Although Gamal complained of 
sanctions, he also said that there are other factors that make him 
feel as though he operates "in a business vacuum."  Specifically, 
Gamal mentioned government service fees and taxes, lack of access to 
reliable financing, strict labor laws, and an under skilled 
workforce as negative factors affecting his business.  Gamal cited 
one example of a  "computer fee" that he occasionally receives from 
the government, noting "I don't understand this - we're being 
penalized for using computers?" 
 
¶3.  (U)  Setting the tone for the event, Engineer Medab Yacoub 
opened the conference strongly criticizing U.S. sanctions, saying 
that sanctions have had a negative effect on both public and private 
projects.  Yacoub stated that "The U.S. and Europe are trying to 
eliminate Sudan and Africa from the modern world."  Continuing, she 
said that the West should not use political excuses to attack 
Sudan's economy. 
 
¶4.  (U)  Dr. Abdul Gadir Abdul Nur noted that there are a number of 
challenges to Sudan's business environment despite positive 
developments in Sudan such as the privatization program started in 
the 1990's, the peace dividend associated with the Comprehensive 
Peace Agreement, and the rise of the oil industry.  Nur noted that 
U.S. sanctions have created a number of challenges to Sudan's 
economy that include: limited access to raw materials; reduced 
markets for export; difficulty in importing the latest technology; 
and reduced access to advanced training.  Nur stated that "one of 
the main reasons the economy has not liberalized in Sudan as 
expected is because of U.S. sanctions."  Nur said that the impact of 
sanctions, though impossible to measure, is felt directly and 
indirectly, in both the short and long term.  Abdul Nur concluded 
that though sanctions are a significant challenge, there are many 
other factors that confront Sudan's economy.  For example, Nur noted 
that reverse migration (specifically the return of highly educated 
Sudanese returning from the Arab Gulf) has reduced the number of 
available professional and highly skilled jobs. 
 
¶5.  (U)  COMMENT:  U.S. sanctions have had an impact on Sudan, 
though the extent of that impact is difficult, if not impossible, to 
quantitatively measure.  Specific examples from particular 
industries (as we have recently reported on agriculture, the oil 
industry, and now healthcare) and general observations from 
educated, relatively sophisticated, and moderate observers such as 
these above may be the best evidence we have of the effect of U.S. 
sanctions.  Nonetheless, we would caution against over exaggerating 
the effect of sanctions, as Sudan's oil boom and turn toward Asia 
have mitigated their overall effect.  The sanctions also cut both 
ways, with American companies missing out on a growth market. 
 
FERNANDEZ