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Sudan
FOREIGN AID
Foreign capital has played a major role in development. The great
reliance on it and the general ease with which it was acquired
were major factors contributing to the severe financial problems
that beset the country after the mid-1970s. Sudan obtained public
sector loans for development from a wide variety of international
agencies and individual governments. Until the mid-1970s, the
largest single source had been the World Bank, including the International
Development Association (IDA) and the International Finance Corporation
(IFC). By 1975 the World Bank and its organs had furnished the
equivalent of US$300 million. Excluding repayments, the outstanding
amount had risen to US$786 million in 1981, as major commitments
to projects including agriculture, transportation, and electric
power were made (chiefly by IDA, which accounted by 1981 for more
than US$594 million of the outstanding total).
The Arab oil-producing states, as their balance of payments surpluses
grew in the 1970s following increases in world petroleum prices,
also became significant suppliers of development capital through
bilateral loans and Arab international institutions. The largest
of the latter was the Arab Fund for Economic and Social Development
(AFESD), through which was proposed the 1976 program to develop
Sudan as a breadbasket for the Arab world. The implementing agency,
the Arab Authority for Agricultural Investment and Development
(AAAID), was established in Khartoum, based on an agreement signed
in November 1976 by twelve Arab states. After the mid-1970s, Saudi
Arabia, one of the founders of AAAID, through its Saudi Development
Fund became the largest source of investment capital, apparently
convinced that Sudan's development could complement its own, especially
in making up its large food deficits. Unfortunately, the ambitious
plans for Sudan's becoming the Arab world's major food source
faded by the mid-1980s into an economic nightmare as agricultural
production declined sharply.
In 1977 the United States resumed economic (and military) aid
to Sudan. This aid followed a ten-year lapse beginning with a
break in diplomatic relations between the two countries in 1967,
with relations restored in July 1972 (see United States , ch.
4). In 1977 the United States had become concerned about geopolitical
trends in the region, particularly potential Libyan or Marxist
Ethiopian attempts to overthrow the pro-Western Nimeiri government.
In the five-year period 1977-81, United States economic aid amounted
to almost US$270 million, of which twothirds was in the form of
grants. By 1984, when the United States had become Sudan's largest
source of foreign aid, the country's worsening economic and political
situation, particularly Nimeiri's domestic policies with regard
to the south and the imposition of the sharia (Islamic law) on
society, caused the United States to suspend US$194 million of
aid. In 1985, following Nimeiri's visit to Washington, the United
States provided Sudan with food aid, insecticides, and fertilizers.
After Nimeiri's overthrow in April 1985 and Sudan's failure to
make repayments on loans, the United States discontinued non-food
aid. The aid had been administered by the United States Agency
for International Development (USAID). It not only included direct
funds for projects and project assistance through commodity imports
(mainly wheat under the Food for Peace Program), but also generated
local currency that was used to support general development activities.
USAID continued providing humanitarian relief assistance to distressed
regions in Sudan through early 1991.
Britain also made substantial aid contributions to Sudan, notably
the sum of US$140 million to the Power III Project in the 1980s
(see Electric Power , this ch.). In January 1991, Britain suspended
its development aid to Sudan, which had amounted to US$58 million
in 1989, while continuing humanitarian aid. This policy change
was caused by a number of factors, including alleged terrorist
activities by Sudanese agents against Sudanese expatriates in
Britain. In addition to Britain, France, West Germany, Norway
and other countries, EC have provided significant economic or
humanitarian aid to Sudan (Britain, Japan, West Germany, and the
Netherlands also have been Sudan's main sources of imports). Japan
is a major buyer of Sudanese cotton, while Sudan imports Japanese
machinery. In early 1990, to ease Sudan's debt burden, the Danish
government cancelled Sudan's outstanding debt totalling more than
US$22.9 million. Other major financial assistance came from Arab
countries, especially from Saudi Arabia (Sudan's largest importer)
and Kuwait. By December 1982, Sudan owed the Persian Gulf states
US$2 billion. Saudi Arabia's assistance after 1980 mainly took
the form of balance of payments support and petroleum shipments,
rather than project aid. The total amount of aid from Arab states
dropped in 1988 to only US$127 million, the lowest figure since
the late 1970s. Arab aid totaled US$215 million in 1985, US$208
million in 1986, and US$228 million in 1987. Sudan's support of
Iraq in the 1991 Persian Gulf war alienated the Gulf states and
Saudi Arabia, sharply curtailing their economic aid to Khartoum.
The increasingly close ties between Sudan and Iran in the early
1990s also concerned the Gulf states and Saudi Arabia and was
a factor in their diminished financial aid to Khartoum. Economic
cooperation was initiated with Libya in the late 1980s, with Libya
becoming Sudan's third largest supplier in 1989.
In mid-1991 the World Bank announced its decision to close its
Khartoum office by December 31, 1991. The decision resulted from
the deterioration in relations between Sudan and international
monetary bodies following cessation of debt repayment by Khartoum
to the World Bank and the IMF.
Among communist countries, prior to the collapse of communist
regimes in the Soviet Union and Eastern Europe, China had been
the most important provider of development funds. By 1971 it had
furnished loans equivalent to US$82 million, and through 1981
an additional US$300 million was reported to have been made available.
Sudan valued these loans because they were interest free and had
long grace periods before repayments started. Economic cooperation
with China continued into the 1980s. Sudan and China signed a
trade cooperation protocol in March 1989, with technical agreements
also renewed. A commercial protocol between the two countries
was signed in April 1990. China remained a significant importer
of Sudanese cotton in the mid-1980s, while Sudan imported about
US$76 million in goods from China in 1988. Relations between Sudan
and the Soviet Union improved markedly following Nimeiri's overthrow
in 1985, but the overthrow did not result, as Khartoum had hoped,
in Soviet economic assistance, but rather in a decrease in United
States aid.
Data as of June 1991
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