US businesses can now operate more easily in South Sudan

November 6, 2007 (CAIRO) — New regulations governing U.S. sanctions against Sudan mean U.S. businesses can now operate more easily in the semi-autonomous south, which is struggling to develop after decades of war with Khartoum, analysts said.

An October 31 notice from the U.S. Office of Foreign Assets Control (OFAC) has cleared up confusion arising from a sanctions order issued last year. The new notice said most activities and money transactions, other than in the oil industry, are allowed in the south.

A White House order last year added to U.S. sanctions which date back to 1997, but it also exempted the southern region, run by a semi-autonomous government of former rebels.

The new sanctions were meant to put pressure on the Khartoum government for its handling of the crisis in the Darfur region of western Sudan but the United States did not want to penalise southerners who played no part in the Darfur conflict.

Until now U.S. organisations have still had to go through long procedures with OFAC to get around the 1997 order.

A U.S. diplomat who asked not to be named said regulations issued last month were made to clarify the south’s status after the 2006 order.

“To get an exemption from the comprehensive sanctions imposed in November 1997 was virtually impossible,” added Sudan specialist Eric Reeves, who has been trying to set up schools in the south despite “extremely onerous” regulations.

“In some fundamental sense only now have sanctions really been lifted on the south,” Reeves added.

A U.S. consultancy group said it had been unable to complete the process of handing over electronic equipment to emerging government institutions because of the regulations.

“In fact we never managed to get a licence, despite trying, and so we have retained ownership of equipment and ‘lent’ it to the ministries,” a member of the organisation said in an e-mail.

Supplying government with vehicles and other equipment should now be easier as long as they do not go through northern Sudan, he said.

“It should have been clear from day one that the south would be exempted from the sanctions,” said Sudan expert John Prendergast, currently with the Enough Project.

He said the period of confusion arose from what he called U.S. government ineptness.

Some Sudanese media reported the move as lifting sanctions on the south. “There was massive confusion … business like clarity and they hate bureaucracy,” Reeves said.

“The GOSS (south Sudan government) has been lobbying the U.S. to clarify the south’s status for some time,” Prendergast said, adding that private U.S. involvement in the south will be significant for the region’s development.

Banks operating in the south Sudan capital Juba have been operating different practices. Some have had money from the United States sent via East Africa to avoid what one bank manager called the headache of direct transfers to the south.

Southern Finance Minister Kuol Athian told Reuters last month that he had recently visited the United States to push for easier U.S. investment in the south.

He also said that since his trip dollar restrictions had been lifted, facilitating business.

(Reuters)