Sudan Transition an “Opportunity” to End Darfur Crisis

UNAMID peacekeepers in Dafur could be scaled back from November if the situation on the ground improves. This picture of peacekeepers is dated 2012. Courtesy: Albert González Farran/UNAMID

By James Reinl
UNITED NATIONS, Aug 27 2019 – Sudan’s transition to civilian rule offers a chance to end the ethnic violence that plagues the western province of Darfur and end a peacekeeping mission there, a top United Nations official said Monday.

Jean-Pierre Lacroix, the U.N. under-secretary-general for peace operations, told the U.N. Security Council that the peacekeeping force in Darfur, known as UNAMID, could be scaled back from November if the situation on the ground improves. 

A complex civilian-military transitional government is set to rule Sudan for a little over three years until elections can be held, following a mass protest movement that forced the ouster of longtime authoritarian President Omar al-Bashir in April.

“This is an opportunity to put a definitive end to the conflict in Darfur,” said Lacroix.

“Donor support will be critical more than ever to assist the simultaneous transitions in Darfur and wider Sudan, particularly considering the economic crisis that triggered the political change.”

In June, council members agreed to “pause” the drawdown of UNAMID’s 5,600-strong blue helmet force, which was deployed to Darfur in 2007 amid fighting between rebels and Sudanese government forces.

The new government in Khartoum has pledged to revive peace efforts in Darfur and other hinterlands, though it remains unclear whether the new sovereign council’s civilian or military members will wield more influence.

The political shift in Khartoum has not changed the situation in Darfur, where anti-government rebels clash with the Sudanese armed forces and a paramilitary group called the Rapid Support Forces, Lacroix said via video link. 

Sudan’s ambassador to the U.N., Omer Mohamed Ahmed Siddig, urged council members to lift an arms embargo on Darfur and to start withdrawing peacekeepers by an agreed deadline of June 2020.

“Realisation of peace is my government’s priority during the coming six months,” Siddig said in New York.

“We call on the international community to join my government in inducing the revolutionaries who fought for toppling the previous regime to join hands with us to uplift the plight of our people who suffered the consequences of war.” 

Darfur is not Sudan’s only flashpoint. On Sunday, the sovereign council formally declared a state of emergency in the Red Sea city of Port Sudan, following clashes between tribesmen there that police say have killed at least 16 people.

Addressing the council, British diplomat Jonathan Allen spoke of “hope and optimism” at the “beginning of a new chapter in Sudan’s history” that could tackle the bitter ethnic splits in a nation of some 40 million people.

“The new government has committed to achieve a fair, comprehensive and sustainable peace in Sudan and prioritise the peace process,” Allen said.

“We call on all sides but in particular the armed movements to engage constructively, immediately and without preconditions in negotiations to finally deliver a peaceful solution to the conflict in Darfur.”

The military overthrew Bashir on Apr. 11 after months of mass demonstrations, but protesters continued taking to the streets — fearing the military could cling to power — and demanded a swift transition to a civilian government.

A power-sharing deal between protest leaders and Sudan’s Transitional Military Council (TMC) was signed earlier this month, ending months of political chaos.

But tensions between the military and civilians are expected to feature prominently in new Prime Minister Abdalla Hamdok’s unruly transitional government.

Beyond politics, Sudan has been wracked by flooding across 17 of its 18 states that has claimed the lives of at least 62 people, the government says. Thousands of people have been displaced by the floods, which are worse in areas along the river Nile.

Trade, Currency War Weapons Double-Edged

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Aug 27 2019 – The US-China trade war has flared up again less than two weeks after US President Donald Trump delayed new tariffs of US$160 billion on Chinese imports until December, purportedly to avoid harming the holiday shopping season.

Ratcheting up war talk
Earlier, after two days of trade talks without much progress, Trump claimed on 1 August that China had not kept its promise to buy more US farm exports. He then announced 10 per cent tariffs on US$300 billion worth of Chinese imports, besides the 25 per cent already levied on US$250 billion of goods from China.

Anis Chowdhury

China’s Commerce Ministry responded on 5 August by stopping purchases of US agricultural products. Its central bank, the People’s Bank of China (PBoC) also allowed China’s long over-valued renminbi (RMB) currency to fall below the RMB7 per dollar ‘threshold’ to its lowest level in more than a decade, causing US equity markets to plunge.

In response, Trump tweeted, “It’s called ‘currency manipulation’.” Supporting the President, the US Treasury officially claimed, for the first time since 1994, that China was manipulating its currency.

Trump then announced on 9 August that he was not ready to make a deal with Beijing, suggesting that he might cancel the next round of trade talks scheduled in September. Back-tracking on his promise to Chinese President Xi, Trump reaffirmed US business restrictions on Chinese 5G pioneer Huawei.

On 23 August, on the eve of the G7 Summit, China announced new retaliatory tariffs of US$75 billion on US goods, increasing duties by 5-10 per cent on more than 5000 US exports, including food, aircraft and oil, besides re-imposing its 25 per cent duty on US cars.

In more angry tweets, Trump announced higher US tariffs: raising the 25 per cent tariff on US$250 billion of Chinese imports to 30 per cent, and the 10 per cent tariff, announced on 1 August on US$300 billion of Chinese goods, to 15 per cent from 1 September.

Trump also ordered US companies to “start looking for an alternative to China, including bringing your companies HOME and making your products in the USA”.

Currency manipulation?
Unsurprisingly, China’s actions do not satisfy the US Treasury’s own criteria for currency manipulation. Of the three criteria, two were internationally agreed in the IMF’s Articles of Agreement: persistent one-sided intervention by a country to push down the value of its currency, and a large current-account surplus. Neither apply to China currently.

Jomo Kwame Sundaram

After the Tiananmen protests three decades ago, China sought currency stability by virtually pegging its RMB to the US$, imitating Hongkong’s official dollar peg from 1983. As its agricultural and manufacturing productivity rose, its exports and trade surplus rose rapidly, causing its currency to become substantially undervalued for more than a decade.

Over a decade ago, China buckled under tremendous international pressure, with the RMB rising by 40 per cent, and probably overvalued in the last decade, especially after it officially became an IMF reserve currency in October 2016.

In the last half decade, the PBoC has intervened to slow RMB depreciation; from mid-2014 to late 2016, it spent about US$1 trillion, a quarter of its foreign exchange reserves, to bolster the RMB, by far, the largest intervention in history to support a currency.

Weaponizing currency
With Chinese economic growth slowing in recent years, US imports from China falling, and an almost balanced current account, the PBoC ending its costly support should weaken the overvalued RMB, and strengthen the greenback, which Trump once wanted to make America great again.

On this, China is not alone, but the US is. Trump regularly accuses others, especially countries the US has large trade deficits with – such as Japan, Korea, Germany, Canada and Mexico – of unfair competition, which he blames on their allegedly undervalued currencies.

In July, Trump tweeted, “China and Europe playing big currency manipulation game … in order to compete with USA. We should MATCH …” Soon after, on 18 July, returning from a G7 Finance Ministers’ meeting, Treasury Secretary Steven Mnuchin said the US might intervene in currency markets.

Vicious circle
A ‘beggar thy neighbour’ currency war is further destabilizing the already fragile world economy still struggling to recover more than a decade after the global financial crisis without addressing its ‘exorbitant privilege’ – of being the premier world reserve currency since the Bretton Woods ‘dollar standard’ – enabling its perennial trade deficits.

The US trade deficit is also due to spending more than it produces. The insatiable US consumption appetite – long and still increasingly debt-financed – drives its trade deficit. This is exacerbated by rising budget deficits, worsened by generous tax cuts for the wealthy.

Trump has also blamed the US Federal Reserve, implying Fed Chairman Jerome Powell is a “bigger enemy” for allowing the dollar to strengthen, and pressing him to lower the interest rate as he seeks re-election next year.

The Fed has caved in, citing the growing weakness of the US economy due to the trade war. But lower interest rates will likely only enable more cheap debt-financed consumption and wealth concentration.

The weaker Euro, Japanese Yen and other major currencies in recent months reflect their weak economies. But the more Trump rattles financial markets, the stronger the US dollar will become, regardless of Fed actions, as investors seek refuge in US ‘safe havens’.

As long as the US dollar remains the world’s major reserve currency, this fate seems unavoidable. Thus, Trump induced volatility is sending the dollar up, rather than down.