USIP’s continuing series on “sleeper risks” examines how Sudan’s economic crisis may be the single most important factor in the country’s overall trajectory this year, and could very well tear the country apart.

Sudan: Economic Pressures Building
Photo courtesy of NY Times

2013 Series on Sleeper Risks

Many of the clearest risks of conflict, violence and instability around the world have received widespread media attention. But a variety of other risks and threats have been smoldering quietly. The United States Institute of Peace (USIP) is engaged in a variety of peacebuilding and conflict management efforts in many of the countries where these lesser-known risks are emerging. In a series of articles, the Institute examines some of these “sleeper risks” through the analytical lens of USIP experts. | Read more about USIP’s series on sleeper risks

In Sudan, the ruling National Congress Party is facing rising political opposition that is driven, in part, by an economy in crisis. That political unrest could deepen internal conflicts in Sudan—and perhaps prolong Sudan-South Sudan disagreements if the Sudanese regime of President Omar Hassan al-Bashir takes tough, militarized moves against South Sudan to try to win nationalist support and distract Sudanese from their economic woes. The state of Sudan’s economy may be the single most important factor in Sudan’s overall trajectory in the coming year, says Jon Temin, USIP’s director of Sudan and South Sudan programs.

A Sudanese government weakened by the loss of now-independent South Sudan is fighting rebels in the states of South Kordofan and Blue Nile, as well as in Darfur in Sudan’s west. At the same time, political opposition parties and civil society groups have been mobilizing, and street protests against government austerity measures broke out in the capital Khartoum last summer. Some of the rebel and opposition movements signed a charter on January 5 calling for the toppling of the Sudanese regime, albeit with differences over the use of force.

Sudan’s economy is facing a deepening emergency. Sudan itself has relatively little oil. South Sudan decided one year ago to halt all oil production, alleging that Sudan—through which the oil was carried in pipelines flowing north for export—was stealing some of the oil and demanding exorbitant fees. That action cut off a major source of Sudan’s revenues. A deal last year to resume South Sudan oil exports remains mired in Sudan-South Sudan disputes over some border regions and Khartoum’s allegations of South Sudanese support for rebels in Southern Kordofan and Blue Nile.

Facing a loss of oil transit revenue and of population after the two countries split, Sudan reduced gas subsidies, sparking price hikes on food and other products. South Sudan’s secession also depleted foreign exchange reserves, despite some infusions of money from Arab governments. Inflation has shot up to about 40 percent, and the Sudanese pound has undergone significant devaluation. The overall economy is contracting at a rate of about 10 percent annually, and unemployment—particularly for youth—is high, though official unemployment statistics do not currently exist.

The economic mess may well push more Sudanese into some form of opposition. “The pie shrinks, and people fight for what remains,” said Temin. The Sudanese regime relies on a system of patronage to maintain support; with money in short supply, Khartoum lacks much of what it needs to keep its political machine running well. “If the revenue dries up, they are in a bad place,” said Temin.

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