INTERVIEW-South Sudan peace won’t hold without aid – C. Bank
By Edmund Blair
CAIRO, June 15 (Reuters) – A negotiated peace in the civil war in southern Sudan will not hold if donors use fighting in the west of the country as a reason to withhold much-needed aid, the Sudanese central bank governor said on Tuesday.
Africa’s largest nation and one of its poorest is close to reaching a peace deal with southern rebels to end a devastating 21-year-old civil war but the deal does not cover another conflict that erupted last year in the western Darfur region.
“If Darfur is used as an excuse not to support Sudan, then the peace will not be sustainable,” bank governor Sabir Mohammad al-Hassan told Reuters in an interview on the sidelines of a conference in Cairo.
“For sustainability of peace you need the support of the international community,” he added.
Potential Western donors have been voicing increasing concern about fighting in Darfur, saying that if left unchecked it might derail the southern deal which could be signed in July.
World leaders at the weekend Group of Eight summit called on Khartoum to disarm groups waging a campaign of looting, burning and rape in Darfur, where a million people have been displaced in what aid officials call a major humanitarian crisis.
But Hassan said Sudan expected substantial debt relief once a southern deal was signed, as well as steps to end U.S. sanctions, a move that would boost foreign investment in the oil-producing country.
He said rebuilding devastated southern Sudan, which under existing peace protocols has the right to vote on independence after a six-year transition, would cost “billions” of dollars that Sudan could not afford to pay for itself.
Once a southern peace deal is signed, Sudan expects to benefit from the highly indebted poor countries (HIPC) initiative, under which poor countries can write off some debt.
Hassan said HIPC countries usually received 80 to 90 percent debt relief, but he said Sudan hoped it debt relief would cover as much as 95 percent of its roughly $22 billion debts.
Despite the war, the Sudanese economy has shown solid growth, helped by growing oil exports which officials said last year were about 300,000 barrels per day (bpd) and are planned to reach 600,000 bpd in 2005.
FOREIGN INFLOWS
Hassan said economic growth in 2003 was 6.1 percent, ahead of a target of 5.8 percent, while growth in 2004 was targetted at six percent.
He said Sudan was already one of Africa’s biggest recipients of foreign direct investment, receiving about $1.5 billion in 2003 and about $700 million in the first five months of this year, with about 50 percent going into the oil sector.
But he said the inflow of foreign funds was pushing up inflation, which was likely to hit eight or nine percent in 2004, breaching a target of five to six percent.
“We have a very fast growth in broad money because of the inflows… It is not very easy to contain its expansionary impact so that is the main factor behind inflation,” he said.
Hassan said foreign investors currently included Asian companies, which have been active in Sudan’s oil sector, but few Western investors, with U.S. firms having been deterred by U.S. sanctions.
“The removal of the sanctions is crucial for U.S. companies to come,” he said, adding that some sanctions could be lifted by U.S. President George W. Bush soon after a southern peace deal was signed but those that needed U.S. Congress approval could take months.
The Bush administration has said it would not normalise relations with Sudan until it signs a peace agreement to end the war in the south and resolves the situation in Darfur.