The Sudan Sanctions Tangle after Southern Independence - Working Paper 266 by Center for Global Development

The Sudan Sanctions Tangle after Southern Independence Kimberly Ann Elliott assisted by Jeremy Bennett

Abstract South Sudan is the worldâ&#x20AC;&#x2122;s newest nation, in part thanks to pressure from U.S. economic sanctions. The challenge now is how to adapt U.S. policy so that it supports development in the new nation, while also encouraging peace in Darfur, democracy in the north, and respect for human rights throughout. This paper traces the evolution of U.S. policy towards Sudan and recommends changes to ensure that South Sudan is protected from the impact of economic sanctions, while still keeping the pressure on Khartoum. South Sudan was exempted from most U.S. sanctions years ago, but two remain that need to be addressed: limitations on U.S. contributions for debt relief in Sudan; and restrictions on U.S. participation in the petroleum sector.

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Working Paper 266 September 2011

The Sudan Sanctions Tangle after Southern Independence Kimberly Ann Elliott Senior Fellow Center for Global Development assisted by Jeremy Bennett

CGD is grateful for contributions from the Canadian International Development Agency in support of this work. Kimberly Ann Elliott. 2011. â&#x20AC;&#x153;The Sudan Sanctions Tangle after Southern Independence.â&#x20AC;? CGD Working Paper 266. Washington, D.C.: Center for Global Development. http://www.cgdev.org/content/publications/detail/1425421

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The Sudan Sanctions Tangle after Southern Independence South Sudan is the worldâ&#x20AC;&#x2122;s newest nation and some of the credit for that outcome goes to pressure from the United States, including via economic sanctions. The joy of the independence celebrations in Juba still lingers, but the challenge of building a country in South Sudan quickly returned to the fore. The question for U.S. policy how to adapt the sanctions regime so that it supports development in the new nation, while still promoting peace in Darfur, democracy in Sudan, and respect for human rights throughout. This essay traces the evolution of American policy towards Sudan, focusing on the growing tangle of overlapping objectives, congressional legislation, and executive orders imposing sanctions against the country. A key goal now is to ensure that this tangle of sanctions does not ensnare the new government in South Sudan, while also adjusting them as necessary to prod the government in Khartoum to cooperate on other important U.S. objectives. Since the sanctions in place against Sudan are comprehensive, U.S. leverage over the regime now lies in lifting them, which is envisioned as a step-by-step process in the Obama administrationâ&#x20AC;&#x2122;s road map for Sudan. The history of sanctions, however, suggests that this may be more difficult than it seems in theory.1 This essay briefly summarizes the history of the Sudan sanctions and demonstrates how complicated they have become. It then explores how to ensure they are flexible enough to achieve U.S. goals in both Sudan and South Sudan. Two annexes summarize, respectively, key events in U.S. policy and the legal bases for, and conditions for lifting, sanctions against Sudan.

The Evolution of Sanctions against Sudan The Sudan sanctions saga began in 1988 when nonhumanitarian aid was suspended under a Foreign Assistance Act amendment restricting funds for governments in arrears on their debt. That aid was cut off entirely in 1990 following a military coup in Khartoum. While these early sanctions were relatively automatic decisions driven by congressional restrictions on foreign aid spending, the expansion and tightening of sanctions over the years was often driven by advocacy groups concerned about human rights, religious repression, and the conflict in Darfur, rather than by strategic foreign 1

This paper draws on the authorâ&#x20AC;&#x2122;s extensive work on economic sanctions in the twentieth century, most

recently published in Hufbauer, Schott, Elliott, and Oegg (2007).

policy concerns. The history of sanctions against South Africa, Cuba, Vietnam and others suggests that such sanctions can be difficult to lift in the absence of complete capitulation by the target government. Even in South Africa, it took years for the sanctions against the apartheid regime to be unwound after it was gone.2 The bottom line in Sudan is that various new sanctions, or new conditions for lifting old ones, were layered over one another via a mix of executive orders and congressional actions. Following the cut-off in aid, the State Department designated Sudan as a state sponsor of terrorism in 1993, which added restrictions on dual-use exports and arms and munitions sales and added conditions for restoring aid. In 1996, in response to pressure from Congress, President William Jefferson Clinton issues a broad executive order under the International Emergency Economic Powers Act banning trade and financial transactions with Sudan because of terrorism, threats to regional stability, and human rights concerns, including slavery and suppression of religious freedom. Not satisfied, and with strong backing from human rights and evangelical Christian groups, Congress passed additional legislation affecting Sudan, including laws to address human trafficking and violations of religious freedom around the world. The legislation was generic but could have been used to impose sanctions against Sudan if similar measures were not already in place under other legal provisions. In 2002, 2004, and 2006, Congress also passed Sudan-specific legislation aimed at first encouraging and then supporting implementation of the peace agreement signed in 2005, as well as addressing the conflict in Darfur. These acts added conditions for lifting sanctions, while providing exceptions for assistance to support the peace process and capacity-building and to promote development in southern Sudan. In annual appropriations bills, Congress also specifically prohibited most economic and military aid to Sudan and restricted its eligibility for debt relief, until the president certifies that a democraticallyelected government is in place and that Sudan is cooperating with conflict resolution and humanitarian relief in Darfur. Annex 1 provides a timeline of key events related to sanctions against Sudan, while updated case studies from the Hufbauer, Schott, Elliott, and Oegg (2007) sanctions analysis provide additional detail.3 Today, sanctions are nominally comprehensive, but with a number of specific exemptions. They prohibit private trade and financial transactions with Sudan, block the assets of designated government officials, and limit nonhumanitarian economic aid. Despite the sanctions, the United States is a leading donor country in Sudan with billions of dollars in contributions for humanitarian, peacekeeping, and reconstruction assistance since 2005, when the peace agreement between the north and south was

For full case histories, see Hufbauer et al. op cit.

Forthcoming on the Peterson Institute for International Economics website, www.piie.com.

signed.4 In addition, the regional government and designated areas of southern Sudan were exempted from most sanctions after 2005. The key exception is the oil sector, where U.S. persons are still prohibited from any transaction that would benefit the regime in Khartoum.5 Annex 2 underscores the legal maze of actions that will have to be negotiated if a decision is made to normalize relations with Sudan. Secretary of State Hillary Clinton indicated after the relatively peaceful referendum on southern Sudanese independence in January 2011 that the United States was considering removing Sudan from the list of state sponsors of terrorism, but that prospect receded when violence broke out in regions along the new border, including the oil-rich area around Abyei. The terrorism sanctions are now entangled with these other issues and apparently will not be removed until there is progress, despite the State Department’s positive conclusion regarding Sudanese cooperation: The Sudanese government continued to pursue counterterrorism operations directly involving threats to U.S. interests and personnel in Sudan. Sudanese officials have indicated that they view their continued cooperation with the U.S. government as important and recognize the potential benefits of U.S. training and information-sharing…. [T]he bilateral counterterrorism relationship remains solid… 6 In terms of other U.S. objectives, the sanctions also appear to have played some role in the decision by the government in Khartoum to allow the referendum on southern Sudanese independence to go forward in January 2011, and to accept the results, at least so far. As noted, however, the threat of renewed violence remains until all the issues related to southern independence are resolved. And, with respect to the situation in Darfur and the restoration of democracy in the north, the assessment of the results of U.S. policy is less positive. Sudan held its first multiparty elections in 24 years in April 2010, but several opposition parties boycotted them and they were judged by outside observers to be neither free nor fair. And the situation in Darfur remains unsettled, at best. As in many other sanctions cases, there are multiple goals and varying degrees of movement toward them, but continued violence makes it politically perilous for the administration to use both carrots and sticks and to reward positive moves.

http://www.state.gov/r/pa/ei/bgn/5424.htm.

The U.S. Treasury’s Office of Foreign Assets Control released an interpretation of the sanctions regulations

confirming that sanctions on U.S. participation in the oil sector would remain in place after southern independence; see http://www.treasury.gov/resourcecenter/sanctions/Programs/Documents/sudan_secede_guide.pdf . 6

http://www.state.gov/s/ct/rls/crt/2009/140889.htm

Potential Complications of the Sudan Sanctions Tangle How, if at all, does South Sudan’s independence change the situation and how can sanctions be used most effectively going forward? The most important thing is to ensure that sanctions do not inhibit American support for the new government in southern Sudan, that punishing Khartoum is not at the expense of this fragile new state. As noted, southern Sudan was exempted from most sanctions affecting aid, trade, and other finance some years ago. The sanctions most likely to raise problems for the United States in engaging and supporting the new government in the south are the congressionally-imposed restrictions on eligibility for debt restructuring and those related to the petroleum industry. According to one insider account, the government in Khartoum tentatively agreed to assume all of Sudan’s foreign debt, as long as it is able to reach agreement with creditors within two years on eligibility for debt relief.7 If that does not happen, the two parties would have to negotiate an apportionment of the debt and that becomes more likely if Congress continues to block U.S. participation in a debt relief deal. Official creditors generally act jointly in debt relief negotiations, meaning that non-participation by the United States could block any agreement, which, in turn, could lead to South Sudan having to assume some of the debt. Analysis of the debt situation by CGD Fellow Ben Leo suggests that the southern share would not be large under most scenarios, but prolonged negotiations could increase the uncertainty and perceived risk involved in investing in South Sudan.8 With respect to oil, U.S. persons continue to be prohibited from participating in anything to do with that sector if the government of Sudan would benefit. And it is almost inevitable that the government in the north would benefit, at least in the short run, since the only way currently to export oil from South Sudan is via pipelines that goes through the north to Port Sudan. Even if Sudan and South Sudan reach an agreement on dividing oil revenues that allows South Sudan to keep all the revenues generated by oil produced in its territory, it will still have to pay transit fees to Sudan. 7

Specifically, CGD Research Fellow Ben Leo, who has been advising the African Union’s High Level

Implementation Panel on Sudan, reports that Sudan would assume all international obligations if It reaches the decision point for the Highly Indebted Poor Countries debt relief program within two years. Leo discusses the tentative deal here: http://blogs.cgdev.org/global_prosperity_wonkcast/2011/07/12/prospects-for-south-sudan-theworld%E2%80%99s-newest-nation-ben-leo/ 8

For a full discussion of the issues around debt relief after southern secession, see Ben Leo, Sudan Debt

Dynamics: Status Quo, Southern Secession, Debt Division, and Oil—A Financial Framework for the Future. CGD Working Paper 233. Washington: Center for Global Development, December 2010.

Since the U.S. petroleum industry has been barred from operating in Sudan for some time, the direct impact of this sanction on the new state may not be large. It will, however, prevent U.S. public and private sector investment in an industry that is vital for southern export and government revenue.

Conclusions and Recommendations Even as the new citizens of South Sudan were celebrating independence, concerns were rising over renewed violence in areas along the new border. Until the violence ends, both between north and south and in Darfur, at least some U.S. sanctions will remain in place. Sanctions can be most helpful, however, if they do not entangle South Sudan and if the president has the flexibility to respond when Sudan makes progress, as envisioned in the road map. This is particularly important since U.S. sanctions against Sudan are comprehensive and the leverage now lies in lifting them. If the sanctions cannot be lifted because of domestic political opposition, the Khartoum regime has no incentive to cooperate. As summarized in Annex 2, many of the sanctions against Sudan were either imposed under presidential authority, and can be lifted by him, or they include waivers allowing the executive branch to lift them under certain conditions. Providing debt relief or other non-humanitarian aid, or U.S. government support for trade and investment, however, would require Congress to lift the restrictions it has imposed and then to appropriate funds. Short of that, the president cannot waive the sanctions until he can certify that a democratically-elected government is in office in Sudan, which currently is not possible. With respect to commercial trade and private financial flows, those sanctions are imposed by executive order and could be lifted at the president’s discretion, though it could be politically difficult to do so and risks Congress passing legislation to restore sanctions if key leaders are not supportive. U.S. policy effectiveness in both Sudan and South Sudan could be improved if the administration and Congress work together. Two steps in particular would be helpful: 



Clarify in the next foreign aid appropriation bill that debt relief can be considered as supporting the peace process, if the president concludes that it would be useful in resolving the remaining issues around South Sudan’s independence. If likely to contribute to South Sudan’s development, remove the restrictions on U.S. firms participating in the oil sector in South Sudan and authorize transit payments to Sudan related to exports of South Sudan’s oil. This would allow U.S. companies to bring their technology to the oil sector in South Sudan and could be conditioned on South Sudan joining and complying with the provisions of the Extractive Industries Transparency Initiative.

Economic sanctions have not achieved all that the United States wanted in Sudan, but they have contributed positively to Sudanese cooperation in some areas, most notably permitting the oil-rich southern states to secede and create an independent state. The question now is whether the legal flexibility and political space exists to allow the Obama administration to use sanctions as a bargaining tool, or whether the desire for punishment will override all other considerations.

Annex 1 Timeline of Key Sanctions Events (adapted and updated from Hufbauer et al.) 1983: Civil war breaks out between government forces, insurgents of Sudan People's Liberation Army (SPLA), which is composed mostly of non-Muslims from southern part of country that oppose government efforts to impose Islamic law (sharia) over whole country. (National Journal, 10 December 1988, 3130; Congressional Quarterly Weekly, 13 May 1989, 1132â&#x20AC;&#x201C;35) December 1988: US economic, military aid disbursements to Sudan (except for food aid) are frozen because of Sudan's failure for over a year to make $12 million in payments on its debt to US. (Congressional Quarterly Weekly, 13 May 1989, 1135) March 1989: After US administration requests $52 million for Sudan for FY 1990, Congress passes nonbinding resolution, offered by Congressman Gary L. Ackerman (DNY), Sen. Edward M. Kennedy (D-MA), calling on President George H.W. Bush to reconsider extending nonhumanitarian aid to Sudan unless government makes progress in delivering food aid to refugees, negotiating end to civil war. Resolution is later attached as amendment to foreign assistance appropriation bill. (Congressional Quarterly Weekly, 13 May 1989, 1133) 28 February 1990: US Agency for International Development announces that nonhumanitarian aid can no longer be disbursed to Sudan because of amendment to Foreign Assistance Appropriations Act of 1989 (in each annual appropriations since 1986) barring aid to countries in which democratically elected government has been deposed in military coup, as happened in Sudan in June 1989 when Omar Hassan Ahmed Bashir overthrew the civilian government of Prime Minister Mahdi. (New York Times, 16 July 1989, 4; Congressional Quarterly Weekly, 13 May 1989, 1135; Washington Post, 24 May 1990, A48) 25 April 1991: Because of insufficient protection of workersâ&#x20AC;&#x2122; rights, President Bush suspends GSP benefits for Sudan. (CRS1992, 94) 18 August 1993: The US places Sudan on the State Department list of countries designated as supporters of international terrorism, which prohibits provision of nonhumanitarian economic aid (already blocked), restricts dual-use exports and arms sales, and requires US representatives at international organizations to vote against loans to Sudan. (International Trade Reporter, 25 August 1993, 1419) 1994-96: Sudan turns over the international terrorist known as Carlos the Jackal to France; a year later, Sudanese Islamic fundamentalists are implicated in an assassination attempt against Egyptian President Hosni Mubarak. A year after that, U.S. withdraws diplomats citing security concerns. (COMPASS Newswire, 11 November 1994;

Washington Post, 2 July 1995, A27; Washington Post, 24 November 1996, A32; New York Times, 15 February 1996, A6) 24 April 1996: President Clinton signs the Anti-Terrorism and Effective Death Penalty Act, which bans Americans from engaging in any financial transactions with governments on the US list of terrorism sponsors, including Sudan. The sanctions provision is added in reaction to Louis Farrakhan’s travels to Libya to meet with Muammar Gadhafi to discuss ways in which Libya could support Farrakhan’s Nation of Islam activities. (Time, 5 February 1996, 14; International Herald Tribune, 25–26 January 1997, Washington Post, 23 January 1997, A1; US Information Service,8 June 1996) Mid 1996: Sudan expels Osama bin Laden, responding to pressure from the US and Saudi Arabia. (New York Times, 11 July 1996, 6) August 1996: Regulations implementing the US Anti-Terrorism Act authorize financial transactions with the Governments of Syria and Sudan, except for transfers from those governments in the form of donations, and transfers when a US person believes the transaction will be used to support terrorist acts in the United States. The administration writes the regulations so as to avoid what it interprets as unintentional sanctions on Syria and Sudan, the only countries on the terrorism list not already subject to comprehensive US sanctions. (US Information Service Washington File, 15 May 1997; Washington Post, 23 January 1997, A1) 11 June 1997: The Freedom from Religious Persecution Act, HR 1685, sponsored by Rep. Frank Wolf (R-VA), is introduced in the Congress calling for sanctions against countries where religious persecution is found to exist. The bill singles out Sudan and calls for immediate and comprehensive sanctions on the country. Senator Arlen Specter (R-PA) introduces parallel legislation in the Senate. (Journal of Commerce, 11 June 1997, 2A; 143 Congressional Record, H 5129; Wall Street Journal, 7 July 1997, A20) 11 July 1997: The House of Representative passes, 377-33, HR 748, a bill to reverse the administration interpretation of section 321 of the Antiterrorism Act of 1996 that allowed most financial transactions to continue with Sudan and Syria. (Journal of Commerce, 11 July 1997, 3A; HR 2431) 4 November 1997: President William Jefferson Clinton, seeking to stave off harsher and less flexible congressional action, imposes broad sanctions against Sudan by executive order. The action blocks all Sudanese government assets in the United States and bars all trade as well as a wide range of financial transactions with Sudan. (New York Times, 5 November 1997, A7; US Information Service, 4 November 1997) 7 August 1998:US embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, are bombed; 263 people including 11 Americans are killed. Osama bin Laden, a Saudi

Arabian terrorist, is believed to be behind the attacks. (US Information Service, 9 August 1998; Financial Times, 25 August 1998, 12) 20 August 1998:In response to the embassy bombings, the US bombs a pharmaceutical factory in Sudan believed to be linked to bin Laden and producing chemical weapons, as well as three training bases in Afghanistan used by bin Laden’s terrorist network. (US Information Service, 25 August 1998; Financial Times, 25 August 1998, 12) Late September 1998: Two Sudanese diplomats reportedly hold private discussions with State Department officials and are told that Sudan must stop supporting terrorism, halt production of chemical weapons, and end the war in the south to normalize relations with the US. Meanwhile, Sudanese Foreign Minister Mustafa Osman Ismail declares that the Sudanese do not want confrontation with the US and are prepared for a “constructive dialogue” with the US on issues of conflict. (Washington Post, 30 October 1998, A35) 23 March 1999: An official with the US Agency for International Development tells Congress that the US has given more than $130 million in humanitarian aid to Sudan so far in 1999, bringing the total amount disbursed since 1989 to $750 million. (US Information Service, 23 March 1999) 28 April 1999: President Clinton announces general policy of exempting exports of agricultural goods, medicine and medical equipment from unilateral sanctions, including existing sanctions cases. No US financing will be allowed for the sales, but Sudan could now buy U.S. food, subject to licensing conditions to be established by U.S. Treasury. (US Information Service, 28 April 1999a; 28 April 1999b; Journal of Commerce, 4 May 1999, 8A) 3 May 1999: US Treasury Department unfreezes businessman SalehIdris' $24 million in American assets. Treasury maintains that to prove Idris has links with terrorist Osama bin Laden would jeopardize American intelligence agents. Idris was the owner of the Khartoum pharmaceutical factory bombed by the United States, which maintained the plant had produced biological weapons for bin Laden. Idris maintained that he had no links to bin Laden and that the factory had never produced weapons of mass destruction. (Washington Post, 7 May 1999, A38; International Herald Tribune, 17 May 1999, 8) Early June 1999: In remarks published in a Lebanese magazine, Sudanese President Bashir declares the Sudanese government is ready to cooperate with the United States to make clear it is not supporting terrorism in any way. (Washington Post, 11 June 1999, A18) 2001: Sudan is placed on the Tier 3 list (sanctionable) under the Trafficking Victims Protection Act of 2000 for failing to meet minimum human rights standards set out in

that legislation. Because Sudan is already subject to broad sanctions, the action is mostly symbolic. (CRS 2005, 13) 11 September 2001: Al Quaeda uses hijacked airplanes to destroy the two World Trade Towers in New York City and to hit the Pentagon, killing thousands. A fourth plane crashes in Pennsylvania, apparently when passengers try to retake cockpit. 28 September 2001: Noting Sudan’s recent cooperation on terrorism, UN Security Council removes the 1996 air embargo imposed following the attempted assassination of President Mubarak. This step was facilitated by Sudan’s post-9/11 warming towards the US, which chose not to veto the resolution. State Department spokesman Richard Boucher explains that "We have noted that [Sudan] recently apprehended extremists within that country whose activities may have contributed to international terrorism… [and that] they have worked with us to eliminate the presence of terrorist groups that could threaten American interests. They've provided information on the past doings of terrorist groups in Sudan." Regarding US sanctions, Boucher says Sudan will have to take additional steps before sanctions can be lifted. (Financial Times, 29 September 2001; Washington Post, 30 September 2001, A14) 29 May 2002: Washington sends first diplomat to Sudan in six years, naming Jeffrey Millington to the post of charge d’affaires. (Washington Post, 30 May 2002, A21) 21 October 2002: President George W. Bush signs the Sudan Peace Act, which requires the Administration to make semi-annual reports to Congress as to whether “the Government of Sudan and the Sudan People’s Liberation Movement are negotiating in good faith” and calls for sanctions if the President cannot make this determination, including instructing US executive directors of international financial institutions to vote against loans, credits and guarantees for Sudan; to consider downgrading diplomatic relations; to take all possible steps to deny oil revenues to Sudan; and to seek a UN Security Council resolution to impose an arms embargo against Sudan. President Bush certifies that negotiations are continuing in subsequent years.(CRS 2005, 15; International Trade Reporter 19, no. 41, 17 October 2002; Inside US Trade, 14 June 2002, 8) Spring 2003: Sudan Liberation Movement (SLM; also known as Sudan Liberation Army, SLA) and Justice and Equality Movement (JEM) join forces in Darfur and challenge the Government of Sudan, accusing the Government of systematic discrimination against African ethnic groups. The Government dismisses the SLM and JEM as terrorist groups, and begins a scorched earth campaign, encouraging the Janjaweed (Governmentsupported Arab militias) to target civilian populations suspected of supporting the SLM fighters. Tens of thousands will eventually die and roughly 2 million will be displaced from their homes. (CRS 2005, 2; ICG; State Department Background Note on Sudan, www.state.gov/r/pa/ei/bgn/5424.htm)

18 May 2004: State Department removes Sudan from a list of countries considered “noncooperative” in the war against terrorism. Spokesman Richard Boucher notes “Sudan has taken a number of positive steps on cooperation against terrorism over the past few years…[and] the U.S.-Sudanese bilateral counter terrorism information sharing has improved remarkably but they remain on the state terrorism list because of the presence of Hamas and Palestinian Islamic Jihad and some other concerns we have.” Sudan still faces US sanctions because it remains on the list of state sponsors of terrorism, and Secretary of State Powell declares that the US will not normalize relations with Sudan until the crisis in Darfur is addressed. (CRS 2006, 13; Voice of America press releases and documents, 18 May 2004) 23 December 2004: President Bush signs the Comprehensive Peace in Sudan Act, which amends the Sudan Peace Act to allow the President to provide funds “to support the implementation of a comprehensive peace agreement that applies to all regions of Sudan, including the Darfur regions” and “to address the humanitarian and human rights crisis in the Darfur region and eastern Chad.” (CRS 2005, 16; White House press release, 23 December 2004) 2005: Congress passes the Assistance for International Malaria Control Act and amends the Foreign Operations, Export Financing, and Related Programs Appropriations Act with respect to Sudan in an attempt to distinguish between the Government of Sudan, the people of Sudan, and the areas of the country outside government control. (CRS 2005, 13, 14) 9 January 2005: Government of Sudan and the SPLM (Sudan People’s Liberation Movement; also known as SPLA) sign the Comprehensive Peace Agreement, which officially ends a 21 year-old civil war by providing for a ceasefire, the withdrawal of troops from southern Sudan, and the repatriation and resettlement of refugees. Under the accord, sharia will apply in the north but not the south. After a six-year interim period of self-rule, the south will hold a referendum to decide whether to remain part of Sudan or secede. (State Department Background Note on Sudan, www.state.gov/r/pa/ei/bgn/5424.htm; Washington Post, 10 January 2005, A9) 13 October 2006: President Bush signs the Darfur Peace and Accountability Act, which calls on the president to block the property of, and prohibits transactions with designated individuals and entities associated with Sudan’s government. President Bush issues Executive Order 13412 to implement the asset blocking provisions of the legislation. The new legislation also eases sanctions against areas of southern Sudan, provided that transactions don’t involve the Sudanese government. (Mondaq Business Briefing, 25 March 2007)

June-July 2007: UN Security Council Resolution 1769 authorizes the deployment of a joint African-Union/United Nations peacekeeping force in Darfur. (The Economist, 14 July 2007; CRS 2011, 14) July 2008: The International Criminal Court indicts Sudanese President Bashir for war crimes, crimes against humanity, and genocide; Chief Prosecutor Luis Moreno-Ocampo asks ICC judges to issue an arrest warrant for Bashir. The charges relate to actions committed in the Darfur region. This is both the first time the Court has sought action against a sitting head of state and that it has sought an indictment for the charge of genocide. (The Economist, 17 July 2008; Financial Times, 15 July 2008; CRS 2011) October 2009: President Obama unveils a new comprehensive policy towards Sudan that encompasses possibly lifting sanctions and removing the country from the State Department’s state sponsor of terrorism list. The policy’s three priorities are: implementing the Comprehensive Peace Agreement signed in 2005, ending the conflict in Darfur, and ensuring that Sudan does not become a safe haven for international terrorists. The policy also specifies that relations will not be normalized unless progress is made on all the issues. (CRS 2011, 5) December 2009: A law authorizing referenda on independence for southern Sudan, and whether residents of Abyei wish to be part of the north or the south, is passed. (Reuters, 31 May 2010; Carnegie Endowment for International Peace, 4 January 2011) September 2010: Certain restrictions on licensing regulations in the agricultural sector and restrictions on spare parts for trains are removed. (CRS 2011, 7) 7 February 2011: Following the announcement of the referendum results setting southern Sudan on a course towards independence in July, Secretary of State Hillary Clinton congratulates all of Sudan, and indicates the United States will begin the process of withdrawing Sudan’s state sponsor of terrorism designation. (http://www.state.gov/r/pa/ei/bgn/5424.htm) 14 June 2011: Responding to the recent outbreak of violence in Abyei and Southern Kordofan, two border regions between northern and southern Sudan, State Department spokesman Mark Toner states that “if Sudan chooses to escalate further the situation and pursue a military solution to the future status of Abyei and Southern Kordofan, the United States will not move forward on the roadmap to normalization of relations, and Sudan will face deeper international isolation.” (US State Department Daily Press Briefing, 14 June 2011)

Annex 2 Legal Bases for Sanctions on Sudan: Flows Covered (Reasons) Economic and development aid Foreign Assistance Act of 1961: non-humanitarian economic assistance, as well as military and agricultural aid (debt arrears, support of terrorism). Annual foreign operations appropriations acts: same as above (military coup), plus funds for debt restructuring (military coup, intra-state conflict and human rights); foreign ops funds also specifically denied to Sudan “except as provided through the regular notification procedures of the Committees on Appropriations.” Comprehensive Peace in Sudan Act of 2004, Darfur Peace and Accountability Act of 2006: reiterates restrictions, exempts aid to support peace between North and South or resolve conflict in Darfur (intra-state conflict;

Other Public Finance

Foreign Assistance Act of 1961: Eximbank (support of terrorism).

Annual foreign operations appropriations acts: all public support for trade and investment, multilateral assistance (military coup); foreign ops funds also specifically denied to Sudan “except as provided through the regular notification procedures of the Committees on Appropriations.”

Private Financing

IEEPA Executive Order 13067: investment in or loans to and most other financial transactions in Sudan; blocks assets of Sudan government and designated individuals and entities (terrorism, human rights, religious freedom, and “efforts to destabilize neighboring governments”). IEEPA EO 13400 implements UN Security Council resolutions calling for blocking of assets of individuals (violence in Darfur).

Export-Import Bank Act: allows Arms Export Control Act: president to deny applications credits, guarantees, or other for credit (terrorism). financial assistance by US persons related to export of International Financial defense articles (terrorism). Institutions Act: US executive directors to use voice and vote Comprehensive Peace in to oppose loans from IMF and Sudan Act 2004, Darfur Peace World Bank (terrorism). and Accountability Act of 2006: calls on president to 13

Trade

Executive Order 13067 prohibits exports to or imports from Sudan (terrorism, human rights religious freedom). and “efforts to destabilize neighboring governments”). Executive Order 13412: bars transactions related to oil, gas, and petro-chemical industries in Sudan (as called for in Darfur Peace and Accountability Act of 2006) Arms Export Control Act: arms exports and imports (terrorism, regional stability and conflict). Export Administration Act: requires validated licenses for the export of “goods and technology” that enhance military capabilities (terrorism) Trade Act of 1974: GSP eligibility (worker rights and

human rights). Sanctions currently waived because in place under other provisions: International Religious Freedom Act: development, security assistance to countries designated as being of particular concern for severe violations of religious freedom, as Sudan has been since 1999.

Arms Export Control Act: credits, guarantees, or other USG financial assistance related to munitions sales (terrorism). Comprehensive Peace in Sudan Act of 2004, Darfur Peace and Accountability Act of 2006: reiterates restrictions on bilateral, multilateral public finance, exempts aid to support peace between North and South or resolve conflict in Darfur (intra-state conflict; human rights).

Trafficking Victims Protection Act: non-humanitarian, nontrade related development Sanctions currently waived assistance for countries on because in place under other Tier III Watch list for provisions: trafficking, as Sudan has been. International Religious Freedom Act: executive directors to use voice and vote to oppose publicly-supported bilateral or multilateral financing for Sudan because of severe violations of religious freedom. Trafficking Victims Protection Act: US directors of international financial institutions to oppose IMF

use IEEPA to freeze assets of Sudanese officials, others inhibiting resolution of conflict in South or associated with violence in Darfur (implemented under EO 13412) (intra-state conflict, human rights violations).

terrorism).

Sudan Accountability and Divestment Act of 2007: state and local governments authorized to divest assets in companies doing business in Sudan (intra-state conflict, human rights).

Sudan Accountability and Divestment Act of 2007: federal government must certify contractors do not do business in Sudan (intra-state conflict, human rights).

Anti-Terrorism and Effective Death Penalty Act: financial transactions with designated governments (terrorism). Section 901(j) of the Internal Revenue Code: denies tax credits on foreign earned income (terrorism). Sanctions currently waived because in place under other provisions: International Religious Freedom Act: presidential authority to prohibit US

Comprehensive Peace in Sudan Act 2004: requires president to take steps to deny Sudan oil revenues (intra-state conflict, human rights and genocide in Darfur)

Sanctions currently waived because in place under other provisions: International Religious Freedom Act: authorization to deny licenses for export of dual-use goods (severe violations of religious freedom). Statutory exemptions: Tariff Suspension and Trade Act of 2000 exempts gum arabic from restrictions under Executive Order 13067.

and multilateral development bank loans and other nonhumanitarian funding.

financial institutions from making loans above a certain amount over a certain time period to governments designated as of particular concern for severe violations of religious freedom.

Trade Sanctions Reform and Export Enhancement Act of 2000 provides general exceptions for:  Humanitarian assistance  Medical equipment, devices,  Agricultural commodities

Trafficking Victims Protection Act: authorizes use of IEEPA to deny “significant traffickers” access to transactions in foreign exchange, property, certain kinds of credit transfers, the importing or exporting of currency or securities, and certain other measures against individuals.

Exemptions to Sanctions for South Sudan, Darfur Under Darfur Peace and Accountability Act (2006):  Designated areas of Southern Sudan, Darfur, and certain other specified areas exempted from certain sanctions, but not restrictions on oil industry transactions.  Removes the regional government of Southern Sudan from the definition of the Government of Sudan for purposes of asset blocking orders. Conditions Specified by Congress for Lifting Sanctions against Sudan Darfur Peace and Accountability Act (2006): Specifies sanctions under EO 13067, FAA and annual appropriations should be maintained until the President certifies that Sudan is working to:  Implement the Darfur Peace Agreement  Disarm, demobilize, and demilitarize the Janjaweed and all militias allied with the GOS  Adhere to all UN Security Council Resolutions 15

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Negotiate a peaceful resolution to the crisis in eastern Sudan Fully cooperate with efforts to disarm, demobilize, and deny safe haven to members of the Lord’s Resistance Army in Sudan, and  Fully implement the Comprehensive Peace Agreement Comprehensive Peace in Sudan Act (2004): specifies that sanctions should remain “until the Government of Sudan agrees to, and takes demonstrable steps to implement, peace agreements for all areas of Sudan, including the Darfur region.” NB: Both acts include national interest waivers, however annual appropriations acts specify that funds provided for foreign operations cannot be resumed until the president certifies that a democratically-elected government is in place in Sudan; funds debt restructuring also tied situation in Darfur.

Waivers Under General Sanctions Authorities Foreign Assistance Act of 1961:  Section 620 (a) relating to state sponsors of terrorism: o Under subsection (c), designations may be rescinded only if the President submits a report to the Speaker of the House of Representatives and the Chairman of the Committee on Foreign Relations of the Senate that—(A) there has been a fundamental change in the leadership and policies of the government of the country concerned;(B) that government is not supporting acts of international terrorism;(C) that government has provided assurances that it will not support acts of international terrorism in the future; or(2) at least 45 days before the proposed rescission would take effect, a report justifying the rescission and certifying that—(A) the government concerned has not provided any support for international terrorism during the preceding 6-month period; and (B) the government concerned has provided assurances that it will not support acts of international terrorism in the future. o Under subsection (d), the President may waive sanctions if he determines that national security interests or humanitarian reasons justify a waiver, except that humanitarian reasons may not be used to justify a waiver for military, security, and peacekeeping assistance, or support from the Economic Support Fund, or Export-Import Bank credits.  Section 620(q) relating to debt arrears-President can waive if in the national interest. Other sanctions provisions related to designation as a state sponsor of terrorism:  Export Administration Act of 1979: Secretary of State can lift or waive after the President notifies Congress.  Arms Export Control Act: Secretary of State can lift or waive after the President notifies Congress; President can also waive on a transaction-by-transaction basis. Congress may block by joint resolution; no waiver for restrictions on Foreign Military Financing Program.  Export-Import Bank Act of 1945: President has the authority to impose and to lift sanctions against countries determined to not be cooperating with counterterrorism efforts.  International Financial Institutions Act Secretary of the Treasury has the authority to impose if the country is listed under Section 6(j) of the EAA or Section 620A of the Foreign Assistance Act.

Consolidated Appropriations Act of 2010 (and previous appropriations)  Reprogramming Notification Requirements for Specific Countries: “None of the funds appropriated under titles III through VI of this Act shall be obligated or expended for assistance for Sudan [and other designated countries,] except as provided through the regular notification procedures of the Committees on Appropriations.”  Specific Limitation on Assistance to Sudan: Can be lifted if the GOS is making efforts to resolve conflict, allow humanitarian assistance.  Military coup d etats: Prohibition on assistance for programs in Titles III-VI, including eligibility debt restructuring, can only be waived if President certifies democracy is restored. Trade Act of 1974 (Generalized System of Preferences):  President has the authority to determine eligibility, subject to public petition process.

References Hufbauer, Gary Clyde, Jeffrey J. Schott, Kimberly Ann Elliott, and Barbara Oegg. 2007. Economic Sanctions Reconsidered. Third Edition. Washington: Peterson Institute for International Economics. Center for Strategic and International Studies. 2004. To Guarantee the Peace: An Action Strategy For a Post-Conflict Sudan Supplement I: Addressing U.S. Sanctions Against Sudan. March. U.S. Congressional Research Service. 1992. Economic Sanctions Imposed by the United States against Specific Countries: 1979 through 1992 (revised). Washington, August. ________. 1998. Economic Sanctions to Achieve U.S. Foreign Policy Goals: Discussion and Guide to Current Law (updated). Washington, June. ________. 2005. Sudan: Economic Sanctions (revised). Washington, October. ________. 2006. Sudan: Humanitarian Crisis, Peace Talks, Terrorism, and U.S. Policy (revised). Washington, February. ________. 2011. Sudan: The Crisis in Darfur and Status of the North-South Peace Agreement. Washington, April.

U.S. Department of the Treasury, Office of Foreign Assets Control. 2008. What You Need to Know About U.S. Sanctions An Overview of the Sudanese Sanctions regulations. Washington, July 25.