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Cablegate: Imf Resident Dismisses Effect of U.S. Sanctions And

VZCZCXYZ0000
PP RUEHWEB

DE RUEHKH #1838 3290914
ZNR UUUUU ZZH
P 250914Z NOV 07
FM AMEMBASSY KHARTOUM
TO SECSTATE WASHDC PRIORITY 9285

UNCLAS KHARTOUM 001838

SIPDIS

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

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: PREL PGOV EFIN ECON EAID SU
SUBJECT: IMF RESIDENT DISMISSES EFFECT OF U.S. SANCTIONS AND
CONVERSION TO EURO

1. (SBU) SUMMARY: In a November 20 meeting with PolChief and
EconOff, the resident representative of the International Monetary
Fund in Sudan, Wabel Abdallah labeled the Central Bank of Sudan's
decision to convert its reserves to the euro as unrealistic,
dismissed the effect of U.S. sanctions on the Sudanese economy, and
described the 2008 budget for the Government of National Unity (GNU)
as the first transparent budget ever in Sudan. Abdallah also
acknowledged the influence of government parastatals on the Sudanese
economy. END SUMMARY.

2. (SBU) Abdallah was dismissive of the Central Bank of Sudan's
plan to convert all dollar reserves into euros by the end of 2007.
He noted that a very large percentage of direct foreign investment
into Sudan comes from the Arab Gulf states. He stated that these
Arab investors receive oil revenue in dollars, have grown accustomed
to the ease and universality of the dollar, and that it is unlikely
they will abandon it in international transactions.

3. (SBU) Abdallah stated that U.S. sanctions no longer have an
impact on the Sudanese economy. He stated that the government and
private sector have grown accustomed to doing business in this
environment and that they have found alternatives and ways around
the sanctions. He noted that Sudanese are not afraid of further
U.S. actions, but worry about European countries imposing their own
sanctions, as they have come to rely upon European investment,
businesses, and services. He noted widespread corruption, in
particular in the South, as a major challenge facing Sudan.

4. (SBU) Abdallah recently served as an advisor and consultant for
the 2008 budget for the Government of National Unity. He said that
the budget will meet international standards and will offer an
unprecedented level of transparency in Sudan. Abdallah added that
another advisor from the IMF will soon arrive in Juba to provide
similar budget assistance to the Government of South Sudan.

5. (SBU) Abdallah said that many Sudanese government ministries
operate with a significant degree of financial autonomy and maintain
their own independent sources of income. He cited the Sudanese
Ministry of Foreign Affairs (MFA) as an example, claiming that the
MFA is currently constructing a new office building without any
direct budgetary support from the Ministry of Finance or the GNU.
He also acknowledged the widespread influence of government
parastatals on Sudan's economy. He stated that the profits from
semi-private businesses benefit individuals loyal to the regime
and/or provide an alternative source of funding for government
ministries.

6. (SBU) Bio Note: Abdallah was born in Lebanon, and as the son
of an Ambassador lived in many different countries, including Iran,
during his childhood. While earning his PhD at Columbia University,
Abdallah worked at the United Nations in New York. He has worked at
the International Monetary Fund for the last ten years. He is
married and his wife and children reside in Virginia.

FERNANDEZ

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