Washington Pushes for Reform : Debt, Drought and Chaos Plague U.S. Ally Sudan

KHARTOUM, Sudan —  Lines of cars, two abreast, coiled for six blocks through the sand-blown streets, their drivers waiting for their weekly ration of three gallons of gasoline. The gas, when available, costs $5 a gallon.

On the black market, a gallon of diesel fuel sells for $15.

To save electricity, the government has ordered all shops to close by 5 p.m., and the marketplaces, once lively in the cool early evenings, are shut down and silent.

Sudan is going through yet another crisis. The country is host to 1.2 million refugees, most of them from Ethiopia and Chad, fleeing drought and warfare in their own countries. In addition, about 600,000 Sudanese have been displaced by drought and survive at the mercy of international relief efforts. The southern half of the country is caught in a sporadic guerrilla campaign that shows no sign of abating.

And finally, the government is flat broke and seems to be making little progress toward working out a national budget that its creditors and allies--principally the United States--can support with more loans and the economic assistance needed to help Sudan get through the coming year.

The United States disclosed on Feb. 17 that it had decided to hold up $189 million in aid scheduled for this year until the Sudanese government arrives at a plan for economic reform that would at least slow down the country’s steady slide toward bankruptcy. And Vice President George Bush will arrive Monday for a four-day visit during which he is expected to discuss the problems with Sudanese officials.

Sudan’s economic decline has been hastened by President Jaafar Numeiri’s decision in 1983 to impose Islamic law on the nation, a move that threw Sudan’s tax system into chaos and brought its commercial life to virtual paralysis.

The U.S. action in holding back aid money is regarded here as extremely significant--an attempt, as a Western European diplomat said, “to put the boot in Numeiri’s backside.”

If so, the boot has not been notably effective so far. The aid suspension was announced last week, but the decision was reached in December and conveyed to the Sudanese government then. Two months have passed, and the Sudanese still have not come up with a budget or package of proposals to present for consultation to U.S. officials or the International Monetary Fund, whose stamp of approval will be vital for continued foreign assistance.

“No one is willing any longer to throw good money after bad,” the European diplomat said, adding that other Western donors are likely to follow the lead of the United States and the IMF.

Sudan receives more U.S. aid than any nation in sub-Saharan Africa and is a key American ally in the region. It is seen as a buffer between Marxist Ethiopia on the east and Col. Moammar Kadafi’s Libya on the west. It is a staunch friend of Egypt, its northern neighbor, and a supporter of American policy in the Middle East, including the Camp David accords of 1978 that led to peace between Egypt and Israel. President Numeiri has made Sudanese military facilities available to American forces, should they ever need them.

Islamization Effects

For those reasons, the U.S. government has been sympathetic to Sudan’s needs. But dealings with Numeiri, 55, have become increasingly problematical over the last two years, owing in large part to Numeiri’s decision to Islamicize the country. U.S. officials are known to have counseled quietly against the move, but with no success.

One of the first detrimental effects of the Islamization was to drive a wider wedge between Khartoum and the southern half of the country, which is predominantly black and non-Muslim.

Southerners were already dissatisfied with what they regard as their second-class status in the eyes of the central government in Khartoum. A rebel group, calling itself the Sudan People’s Liberation Movement, became more active, drawing support from Ethiopia and Libya.

The rebel activity in the region closed down oil exploration and production efforts of the Chevron Oil Co., which had invested nearly $900 million and was planning to build an 800-mile pipeline to get the oil out. The oil, still in the ground, had figured prominently in Sudan’s economic future.

Intellectuals Alienated

Numeiri’s imposition of Islamic law also alienated some Muslims in the north, particularly intellectuals in Khartoum, who saw the severing of hands and the public whippings for thieves, bootleggers and adulterers as being beneath the dignity of Islam.

A state of emergency imposed last April lasted for five months and brought about the imposition of “emergency courts” that meted out summary justice--jail terms, amputations and beatings. This brought protests from human rights groups and objections from the U.S. State Department.

Although the state of emergency was officially lifted in September, the courts, now called “decisive justice courts,” operate much as before, presided over by judges with little or no legal background.

In January, after a two-day trial, 76-year-old Mahmoud Taha, leader of a group called the Republican Brothers, was hanged because he refused to recant his public statements of opposition to Numeiri’s imposition of sharia, or Islamic law. In a pamphlet he had distributed, he said the laws “distort Islam” and “humiliate and debase the people.”

Execution a Warning

Observers here say there was a sharp reaction of outrage among Sudan’s intellectuals, many of whom agreed with Taha’s fundamental objections, even though they were not members of Taha’s small band of Republican Brothers. About 3,000 people, mostly Khartoum’s poor and uneducated, witnessed Taha’s hanging.

“They were people who went for the spectacle,” an American resident of Khartoum said, “but I doubt that it did anything to increase Numeiri’s popularity. . . . Taha was not a major figure here. He was small fry, really, and his execution was probably carried out as a warning to others who might have similar ideas.”

But the most damaging effects of Islamization have been to the economy. Last March, the government decided to introduce zakat, an Islamic taxation system, to replace corporate and personal income taxes.

The new system was to have instituted an across-the-board 2.5% tax on wealth, levied annually. Peasant farmers were to be taxed in kind, either in livestock or agricultural produce.

Hoarders Prosecuted

“It would take several years to get the bureaucracy in place to administer that,” a Western economist said. “There was no way to budget for it, because it had never been done before and no one knew what revenues it would actually generate. And under the system, the first taxes were not to be collected until September, 1985.

“All of that was made worse by the emergency decrees issued last April, under which businessmen were prosecuted and imprisoned for hoarding or selling goods at prices higher than the official government-imposed price. Then all import and export licenses were declared void; new ones were not issued until August. These last two factors alone caused tremendous disruption.”

Since then, the government has backtracked on the tax measures. An excise tax, previously abolished, has been reinstituted and called a “social responsibility tax.” An income tax on salaries has been resumed and called a “redistribution of wealth tax.”

The shifts will take some time to sort out. In the meantime, the government is struggling just to come up with enough money to buy petroleum to keep the country going, however feebly.

Debt $9 Billion

Sudan is already $130 million behind in its payment on an IMF loan agreement. Its external debt stands at $9 billion. Without a rescheduling of its debt payments, Sudan’s annual installments, in each of the next three years, will amount to 130% of its income, an obviously impossible situation.

U.S. officials clearly expect the Sudanese to come up with some kind of proposal for economic reform that will allow aid to continue. Among the reforms are a more realistic exchange rate for the Sudanese currency, pricing policies that provide incentives to agricultural producers and a lifting of government subsidies and price controls. All these measures are regarded as politically risky because of the initial hardship being imposed on the population, particularly in the urban areas.

The alternative, economic experts here say, is that Sudan’s lines of credit will dry up entirely, forcing it to pay cash for all its imports. In that case, experts say, Sudan would come to a near standstill.

Numeiri Grip Firm

As surprising as it may seem to outsiders, Numeiri’s hold on the country seems to be no more threatened by this crisis than by any of the others he has weathered throughout his 16 years as president. Sudanese in the capital grumble at the long lines and short rations for gasoline and complain that conditions have been deteriorating for several years. But there seems to be no organized opposition with any potential for deposing the president.

“Numeiri has a very good security system,” a Western political observer said. “Keeps people off balance, moving up and down, in and out of favor. You can’t point to any particular place where a plot against him might be centered. There may be some dissatisfaction in the army, among those officers who have to go on garrison duty in the south, but it is difficult in this system for dissension to spread without being detected.”

Some longtime observers here say that a trait of Numeiri’s that would ordinarily seem a weakness, in fact, probably accounts for his ability to survive in Sudan.

Focus on Short Term

“Numeiri sees things in the short term,” one of them said. “He doesn’t think about next year; he thinks about next week, or maybe next month. If you talk to him about Sudan five years from now, he’s not interested. If you talk about something that will see him through until June, then maybe you can get his attention.”

The resulting unpredictability keeps Numeiri’s opposition off balance and disorganized, as various figures are ushered in and out of influence, co-opted, bought off with lucrative business opportunities and then set safely aside.

In the meantime, with no logical successor to Numeiri in sight, Sudan’s Western friends will continue to bend over backward to keep the country running, knowledgeable observers here agree.

American military aid (this year set for about $45 million) will remain in place. Another $70 million in emergency food relief will be coming to Sudan from the United States, $20 million of it already delivered.

The U.S. strategic commitment to Sudan remains strong and will be emphasized in Bush’s visit. Bush, on a tour of drought-stricken areas of Africa, will visit refugee camps and American relief projects. But his meetings with Numeiri will probably emphasize U.S. concerns with the Sudanese economy, and he will urge concrete and speedy action.

Numeiri will probably agree, although his definition of speedy may differ significantly from the vice president’s.