Risks from Gulf Investments in an Unstable Sudan

by Nathan Heath ’20, Senior Research Associate and Political Risk Analyst

Four months after the coup ousting long-time President Omar al-Bashir from office, Sudan remains engulfed in chaos. Spurred by grassroots protests from groups such as the Sudanese Professionals Association and ultimately fulfilled by military takeover, the coup has failed to bring peace and stability to the country. Both military and paramilitary troops are terrorizing the population, particularly General Mohammed Hamdan Dagalo (usually referred to as “Hemedti”) and his paramilitary Rapid Support Forces (RSF). The pervasive violence has only worsened Sudan’s economy, which has suffered from widespread inflation, ostracism in the international financial system, large arrears on international debts, and a continuing decline in oil exports following the loss of 75% of its oil fields when South Sudan became independent in 2011. A number of nations in the Middle East-North Africa-Turkey region (MENAT) have made substantial investments in Sudan in an effort to stabilize the country and keep it within the orbit of states aligned against Tehran. Sadly, Middle Eastern investments risk adding to Sudan’s instability and increasing the risk of regional conflict by increasing Hemeti’s access to political finance and fueling competition between Middle Eastern rivals. Saudi Arabia and the UAE’s have long held strong economic ties to Sudan; recent reports indicate that the two Gulf nations gave a combined total of more than $100 million to former president Bashir alone, with $25 million coming exclusively from Saudi Crown Prince Mohammed bin Salman. Presently, investments from Saudi Arabia and the UAE are enriching Hemedti, who controls Sudan’s lucrative gold mines (gold accounted for more than 40% of Sudan’s exports by 2017) in addition to the RSF, whose recruits mostly come from Chad, Mali, and Niger and allegedly carried out atrocities in Darfur, where they were known as the “Janjaweed.” In 2015, Hemedti reached an agreement to send RSF troops to support Saudi and Emirati forces fighting the Houthi rebels in Yemen, and in return, the Gulf states sent Hemedti $350 million to deposit in the Central Bank of Sudan. It is unclear how much of these funds the general kept for himself. In April 2019, the Abu Dhabi Fund for Development announced a $250 investment in the Central Bank of Sudan, half of a $500 joint deposit by the UAE and Saudi Arabia to kick off a $3 billion aid package to Khartoum. In August, the UAE and Saudi Arabia also announced their plan to send of approximately 540,000 tons of food aid to Sudan. With Hemedti now in control of the Transitional Military Council, his access to political finance will likely increase as investments and aid pour into Sudan from Gulf nations. Pouring money into Hemedti’s coffers will in turn increase the spread of violence as the RSF brings its opposition to heel in the name of the TMC.

Not only will Gulf investments in Sudan fund increasing instability, but they may also spur further, dangerous competition between rival Middle Eastern powers. Sudan was actually within the Iranian orbit for years, until Saudi Arabia froze Sudanese financial assets in 2014; that tilted Khartoum back towards Riyadh. While currently lacking influence in Sudan compared to its Gulf rivals, Iran continues to view the country with interest, particularly given its strategic location proximate to the Red Sea, and Tehran may increase its attempts to court its longtime friend (and neighbor to Sudan) Eritrea in order to shore up its strategic foothold in the Horn of Africa. Turkey has also poured extensive resources into Sudan; in 2018, the two countries signed a $100 million oil exploration deal and allocated thousands of square miles of Sudanese lands to Turkish companies for investment. Until this summer, Turkey and Sudan also had an agreement for Turkey to purchase Suakin Island, which would have increased the Turkish strategic foothold in the Red Sea, but in June, heavily influenced by Saudi Arabia, Sudanese Military Council head General Abdel-Fattah Burhan affirmed Sudan’s continued sovereignty over Suakin Island. Finally, Qatar’s longstanding ties with Sudan have declined. Following Sudan’s 2013 fuel crisis, Doha poured $1 billion into the Central Bank of Sudan, and plans were in place for $4 billion of Qatari investment to develop Suakin Island, but Saudi and Emirati investments and increasing influence in Sudan have decreased Qatar’s hold in the country. Saudi and UAE investments in Sudan will further fuel the increasing regional rivalries engulfing Sudan in the Horn of Africa and the Middle East.

In the near future, if the flow of money to the violent RSF continues without conditions, we can expect to see Sudan’s problems fuel increasing instability in the Horn of Africa. Sudan’s northern neighbor, Ethiopia, is primarily interested in protecting its access to water, both in the Red Sea to the east and the Nile River to the north. Accordingly, Ethiopia hopes for stability in Sudan to ensure the flow of the Nile, as well as to prevent spillovers of Sudan’s violence into Eritrea that could hinder Ethiopian access to the Red Sea. Egypt will continue to focus on maintaining the security of its Nile Water access, as Sudan lies in between its weaker Nile Waters and the vast Nile source in Ethiopia. Cairo also has concerns over Turkish, Qatari, and Iranian interests in Sudan, which it views as threats to its security. Eritrea will continue to press for African Union intervention to contain Sudan’s violence, particularly since it had just re-opened its border with Sudan in January 2019. Finally, South Sudan’s primary concern will be the spillover of its northern neighbor’s instability into its own borders, given that the two countries have been separated a mere eight years, during which time the South has been engulfed by intermittent but devastating conflict.

Perhaps more concerningly, Saudi and Emirati investments in Sudan may add to the powder key of rivalries in the Red Sea region. This rivalry is principally between the Saudi-UAE-Egyptian coalition and Iran its regional proxies (Hezbollah, the Houthis, and various Shia militias across the region), with Qatar and Turkey each serving as non-aligned rivals to the Saudis, Emiratis, and Egyptians. Sudan has already been a point of rivalry between these countries, ultimately forcing the country away from Iran, Turkey, and Qatar into the arms of Saudi Arabia, the UAE, and Egypt, whose coalition it joined largely because of the enormous financial gains promised. With Saudi Arabia and the UAE investing billions of dollars over the next several years, Turkey and Qatar are likely to look for opportunities to shore up their influence in Sudan as well. In a conflict with Iran, the Sunni Arab-aligned Sudan will become a more vulnerable target for Tehran, given Khartoum’s current instability.

In short, MENAT foreign investment in Sudan may deepen economic ties and influence for the Gulf States seeking to ensure their interests are protected there, but not without consequences for regional stability. Leadership in Khartoum would do well to facilitate peaceful and stable governance for the country and establish rule of law in order to limit risks to Sudanese security and prosperity posed by ambitious regional powers. For its part, wealthy Middle Eastern states pouring billions into Sudan would benefit from regulating their investments in the country and limiting the possibility of escalating regional tensions through overly competitive geopolitical maneuvering with their rivals. The Horn of Africa and MENAT are each better off with a stable and prosperous Sudan, and the continuous, unregulated funding of heavily armed political entrepreneurs risks undermining this reality.   

Note: This article was completed in August 2019