EFFECT OF U.S. SANCTIONS ON AGRICULTURAL SECTOR

UNCLAS KHARTOUM 001961

SIPDIS

DEPT FOR AF/SPG, AF/EPS, EB/IFD, AND EB/ESC
DEPT PLS PASS USAID FOR AFR, AND ALSO PASS USAID

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV EFIN ECON EAID SU
SUBJECT: EFFECT OF U.S. SANCTIONS ON AGRICULTURAL SECTOR



1. (U) SUMMARY: In a December 3 site visit to Kenana Sugar
Corporation, the managing director of one of the world's largest
integrated sugar farms told emboffs that U.S. sanctions have
affected his business, forced it to use inferior non-U.S. products,
and hurt the overall efficiency of his company. On December 4, in a
separate meeting with the Governor of White Nile State, Dr. Mohammed
Nur Al-Tigani, also stated that U.S. sanctions have hurt the economy
of his agricultural state. On December 5, Sudanese President Omar
Al-Bashir blamed another dimension of U.S. policy for threatening
agriculture, claiming that humanitarian food aid is a "conspiracy"
aimed at undermining Sudanese farmers. END SUMMARY.


2. (U) On December 3, Mohamed Mardi El-Tijani, the General Manager
of the Kenana Sugar Corporation, told emboffs that U.S. sanctions
have forced his company to buy Brazilian crop harvesters and use
non-U.S. consultants, despite not being as effective, efficient, and
reliable as American products and services. (Note: Although the
Government of Sudan owns a 30% share in Kenana, it is not listed as
a specially designated national company by the Office of Foreign
Assets Control. Saudi Arabia and Kuwait hold 35 and 30 percent
respectively. Eight other Sudanese sugar companies including the
neighboring Assalaya Sugar Company in Rabak are specially
designated. End Note.)


3. (U) El-Tijani said that Kenana previously used U.S. crop
harvesters made by Cameco Industries, Inc. (a subsidiary of John
Deere & Company since 1998) but that U.S. sanctions prevented access
to new machines and spare parts. El-Tijani also stated that his
company valued the advice of American consultants such as Francis
Schaefer, the original designer of Kenana, who, due to sanctions,
can no longer serve as a technical consultant. El-Tijani stated
that "it is still possible to get U.S. goods and services, but it
really becomes a nightmare as there are so many middle men. Each
agent will raise the price and it become out of sight." El-Tijani
stated that U.S. sanctions also affect Kenana because his company
does not have access to the U.S. market, which in his view, is even
more attractive since the signing of the 2000 African Growth and
Opportunity Act.


4. (U) In a December 4 meeting with emboffs, the Governor of White
Nile State, Dr. Mohammed Nur Al-Tigani also acknowledged that U.S.
sanctions have affected agriculture in his state, saying "We need
American investments from the U.S. government and the private
sector." Nur Al-Tigani also ambitiously stated that if U.S.
sanctions are lifted that Sudan could quickly become an economic
power like the United States.


5. (U) On December 5, Sudanese President Omar Al-Bashir told a
rally in Gedharef State that Sudan is being targeted and is facing a
major conspiracy aimed at "bringing it to its knees through relief
wheat and sorghum." He praised farmers for helping foil this
conspiracy through increased food production.


6. (U) COMMENT: Agriculture is not usually named as a sector of
the Sudanese economy significantly affected by U.S. sanctions.
(Telecommunications, transportation, and technology are more
frequently cited as impacted by U.S. sanctions.) Nonetheless this
visit to one of Sudan's most fertile areas reveals that U.S.
sanctions have affected Sudanese agriculture.


7. (SBU) Comment continued: Bashir's remarks on humanitarian food
aid are not a new phenomenon from various levels within the National
Congress Party. The USG is the largest donor to the U.N. World Food
Program, which provides life-saving food aid on a monthly basis to
more than 2.5 million internally displaced persons and others
impacted by the conflict in Darfur, as well as millions of others
affected by food insecurity throughout the country. If the Sudanese
Government were to provide food for its own citizens in need, the
U.S. would not need to send as much food aid as it currently does.

FERNANDEZ