Executive Order — Blocking Property of Certain Persons With Respect to South Sudan
The White House
Office of the Press Secretary
For Immediate Release
April 03, 2014
– – – – – – –
BLOCKING PROPERTY OF CERTAIN PERSONS
WITH RESPECT TO SOUTH SUDAN
By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), section 212(f) of the Immigration and Nationality Act of 1952 (8 U.S.C. 1182(f)), and section 301 of title 3, United States Code,
I, BARACK OBAMA, President of the United States of America, find that the situation in and in relation to South Sudan, which has been marked by activities that threaten the peace, security, or stability of South Sudan and the surrounding region, including widespread violence and atrocities, human rights abuses, recruitment and use of child soldiers, attacks on peacekeepers, and obstruction of humanitarian operations, poses an unusual and extraordinary threat to the national security and foreign policy of the United States, and I hereby declare a national emergency to deal with that threat. I hereby order:
Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person (including any foreign branch) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:
(i) to be responsible for or complicit in, or to have engaged in, directly or indirectly, any of the following in or in relation to South Sudan:
(A) actions or policies that threaten the peace, security, or stability of South Sudan;
(B) actions or policies that threaten transitional agreements or undermine democratic processes or institutions in South Sudan;
(C) actions or policies that have the purpose or effect of expanding or extending the conflict in South Sudan or obstructing reconciliation or peace talks or processes;
(D) the commission of human rights abuses against persons in South Sudan;
(E) the targeting of women, children, or any civilians through the commission of acts of violence (including killing, maiming, torture, or rape or other sexual violence), abduction, forced displacement, or attacks on schools, hospitals, religious sites, or locations where civilians are seeking refuge, or through conduct that would constitute a serious abuse or violation of human rights or a violation of international humanitarian law;
(F) the use or recruitment of children by armed groups or armed forces in the context of the conflict in South Sudan;
(G) the obstruction of the activities of international peacekeeping, diplomatic, or humanitarian missions in South Sudan, or of the delivery or distribution of, or access to, humanitarian assistance; or
(H) attacks against United Nations missions, international security presences, or other peacekeeping operations;
(ii) to be a leader of (A) an entity, including any government, rebel militia, or other group, that has, or whose members have, engaged in any of the activities described in subsection (a)(i) of this section or (B) an entity whose property and interests in property are blocked pursuant to this order;
(iii) to have materially assisted, sponsored, or provided financial, material, logistical, or technological support for, or goods or services in support of (A) any of the activities described in subsection (a)(i) of this section or (B) any person whose property and interests in property are blocked pursuant to this order; or
(iv) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.
(b) The prohibitions in subsection (a) of this section apply except to the extent provided in this order and by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order.
Sec. 2. I hereby determine that the making of donations of the type of articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to section 1 of this order would seriously impair my ability to deal with this national emergency, and I hereby prohibit such donations as provided by section 1 of this order.
Sec. 3. The prohibitions in section 1 of this order include but are not limited to:
(a) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and
(b) the receipt of any contribution or provision of funds, goods, or services from any such person.
Sec. 4. I hereby find that the unrestricted immigrant and nonimmigrant entry into the United States of aliens determined to meet one or more of the criteria in section 1(a) of this order would be detrimental to the interests of the United States, and I hereby suspend entry into the United States, as immigrants or nonimmigrants, of such persons. Such persons shall be treated as persons covered by section 1 of Proclamation 8693 of July 24, 2011 (Suspension of Entry of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions).
Sec. 5. (a) Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited.
(b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.
Sec. 6. For the purposes of this order:
(a) the term “person” means an individual or entity;
(b) the term “entity” means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization; and
(c) the term “United States person” means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.
Sec. 7. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that because of the ability to transfer funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render those measures ineffectual. I therefore determine that for these measures to be effective in addressing this national emergency, there need be no prior notice of a listing or determination made pursuant to section 1 of this order.
Sec. 8. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government consistent with applicable law. All agencies of the United States Government are hereby directed to take all appropriate measures within their authority to carry out the provisions of this order.
Sec. 9. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to submit the recurring and final reports to the Congress on the national emergency declared in the order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)) and section 204(c) of IEEPA (50 U.S.C. 1703(c)).
Sec. 10. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
South Sudan Finance Minister: Will Borrow to Cover Lost Oil Revenue
January 11, [JUBA, South Sudan]—South Sudan’s government will have to borrow heavily to compensate for oil revenue lost during ongoing fighting, the finance minister of this resource-rich but impoverished African country said on Saturday.
“I will be searching the whole world for loans and I’ll take the loans that are good for South Sudan from any source,” Finance Minister Agrey Tisa Sabuni said in an interview at his offices here in the capital.
Mr. Sabuni said he’s not sure how much he will need to shore up South Sudan’s $3 billion annual budget. New loans would come on top of the balance of about $1.6 billion the government borrowed last year from oil companies operating in the country to cover the fiscal year that runs through June.
Those loans sheltered the government from revenue lost to a dispute with Sudan that caused South Sudan to stop oil production in 2012 for 15 months. Production was still ramping up to capacity when a power struggle between President Salva Kiir and former vice president Riek Machar sparked turmoil throughout the country in December.
“Just as we were getting our feet, the coup makers come and mess things up.” Mr. Sabuni said. Mr. Kiir and his supporters say Mr. Machar tried to overthrow him. Mr. Machar’s supporters say they were framed by the military.
Mr. Machar fled the capital and marshaled rebel forces to his cause. Subsequent fighting has killed thousands of people and sent more than 250,000 fleeing from their homes, according to the United Nations.
Negotiators for Messrs. Machar and Kiir are negotiating the terms of a cease fire in Ethiopia. Mr. Machar’s backers on Friday said they would drop a demand that 11 of their supporters imprisoned in Juba by Mr. Kiir’s government be released before the fighting could end.
So far the fighting has disrupted at least a fifth of South Sudan’s 240,000-barrel-a-day oil output, Mr. Sabuni said. South Sudan is sub-Saharan Africa’s No. 3 producer behind Angola and Nigeria.
“The economic impact of the current crisis is definitely quite enormous and very pervasive,” he said.
Write to Patrick McGroarty at email@example.com
THE DEBATE – SOUTH SUDAN: THE DEVELUATION POLICY WAS JUST PREMATURE!
Written by Deng S. Elijah
(British Columbia, Canada) –The current debate on South Sudan’s devaluation policy is taking a new turn. The August House, in the present of the Central Bank Governor suspended the devaluation policy on Friday, giving the governor the weekend to prepare his report. I believe the ordinary citizens would benefit if more laymen, like these politicians and myself join the debate, and if someone (BoSS) exists out there to strategically analyze these reports.
The fact that the National Legislative Assembly (NLA) has objected the decision does not necessarily means that the Bank of South Sudan (BoSS) went entirely astray. It could mean that these honorables were just overwhelmed by the rampant premature decisions flooding the country. Or out of availability heuristic, the parliamentarians were forced to believe that the decision was intolerable because of the short-term shocks such as shortage of oil and inflation, which floated the economy before the news report was even concluded on SSTV. From the emotional reaction in the NLA, one would be forced to conclude that the NLA were, perhaps, convinced to have spared the governor. As some were speaking, others were stamping their feet, yet others were either standing yelling or shouting at the top of their lungs. Perhaps this volatility is what led to Monday’s adjournment. This seems to validate the allegation that the former BoSS governor, Elijah Malok, who was removed one month after the independent of South Sudan by the president Salva Kiir, was decreed because of a slide slip of South Sudanese Pound (SSP).
The decision was neither wrong nor right but premature. It would beg a question to conclude that the decision was entirely wrong because the SSP will depreciate and will be devalued sooner or later. It would also be a fallacy to conclude that the decision was right without cost-benefit analysis (CBA) and without convincing the NLA, which runs the politics of the state. Mr. Biar Ajak has well argued against the notion of data as Mr. Chol Kuch argued in its favor, however, I’m convinced that the data Mr. Biar is referring to is the same data I will be referring to in this article. Although this information exists on the Internet, neither of the organs of the Ministry of Finance and Economic Planning (MFEP) nor the BoSS, made an effort to carry out a CBA or utilitarian calculus. It is an economic shock, per se, to see the Central Bank Governor addressing the NLA without, even a single page, summary of this breathtaking policy. To make it worse, the finance minister didn’t even have the guts to show up for the Friday’s briefing. How dare?
Before I proceed, by making the above conclusions, I’m not, by any mean infringing the autonomy of the Central Bank nor am I recommending the CBA for every economic analysis! Furthermore, I’m convinced to acknowledge that I agree with most views raised by my senior analysts Mr. Chol Kuch Chol-Mang’aai and Mr. Peter Biar Ajak in their respective analyses, and therefore, I recommend you read these articles, if you haven’t, because they may complete some parts of this article. Also worth mentioning, I found it interesting that it’s hard to disagree with either of these analysts, entirely, without agreeing with the other. For example, I couldn’t disagree with Mr. Chol until I read his analysis on the balance of trade and some components of inflation, which obliged me to revisit and agree more with Mr. Biar on trade. So, I’m obliged to respond, however, I won’t spare you from interpreting boring statistical data and lengthy reading because this is where we agree and disagree.
The South Sudan’s economic level: South Sudan is, most often, reported as one of the poorest countries in the world; however, such a story is incomplete. The country has abundant resources, including vast oils reserves and one of the most fertile arable soils in the African continent. In Eastern African region, comprising of six other countries: Kenya, Uganda, Burundi, Rwanda, Tanzania and Ethiopia, South Sudan’s nominal GDP is ranked fifth (out of the seven) with USD 13,227. Its GDP per capita is ranked first among the seven Eastern African countries, with average of 1625.0 USD. Globally, South Sudan’s GDP is ranked as 110th, and her GDP per capita comes as 154th out of 193 countries in the world, which is equivalent to 17 percent of the world’s average. Approximated by the Gini index, South Sudan comes 35th of all countries with a coefficient of 46, which comes very close to Rwanda’s ranking, 33rd, with a coefficient of 46.8
In term of GDP per capita, South Sudan has better economic standards than any other East African countries. Given that most of these countries gained independent in earliest 1960s, South Sudan is expected to see economic prosperity in the region, if the country gets stable and if the right monetary and fiscal policies are put in place.
Internally, majority of the country’s population has very little access to the income from oil revenue. An estimate of about 82 percent of the population resides in rural areas, and 49.4 percent lives below the poverty line. Due to poor and inaccessible infrastructure this rural population is disconnected – forming an economic block of its own – from the urban ones. For this reason, we would assume that only a small percentage would be frustrated, ceteris paribus, if this management policy devastates the economy. In other words, many sectors would remain primitive as currently are, however, the rural poor who depends on agricultural products would be least affected, holding other factors constant. And if the opposite holds, then development would stimulate all sectors and everyone would be better off.
South Sudan Foreign Exchange Rate Regime (background): After the independent, South Sudan adopted SSP and within a few weeks (between July 18 and September 1st) converted SDG 1.771 billions out of the SDG 2.1 billions that was in circulation in South Sudan into its own currency, SSP. This was exchanged at a rate of 1:1. By December 11, the Central Bank declared to peg the SSP to the U.S. dollar. It was later recalled that such a move would affect the South Sudan’s exchange rate with its oil-exporting partners such as China, Singapore and Malaysia. For this reason the BoSS resort to adopt an exchange rate regime that is managed within a band. To manage depreciation of SSP to foreign currencies (mainly U.S. dollar), South Sudan started using the floating exchange rate regime, within a band, from September 2011. From 2011 to mid November 2013, SSP has been floated within a band, between 2.9 and 3.3 against 1 U.S. dollar. The SSP has been depreciating sharply due to the low foreign reserves, especially U.S. dollar, in the country. In the black market, 1 U.S. dollar has been traded at over 4 South Sudanese pound. This is one of the factors that necessitated the BoSS to take its current measures to devaluate the SSP. However, it begs a question whether this devaluation would really eliminate the parallel exchange rate in the country.
The SSP could have further depreciated, however, the Central Bank has been injecting foreign currencies (e.g. U.S. dollar) into the market. To meet the increase demand of USD in the market, the BoSS increased its weekly money supply from USD 100 million weekly in October 2011 to USD 200 million weekly in 2012. This measure was rational because it controls inflation. It was also necessary due to speculators who buy and hold the foreign currency, to only sell them when the profit margin is high.
TRADE: South Sudan’s exports are expected to be very close to the amount of oil generated, which yields a proximately USD 2.0 billion per year. Imports, although we lack the latest data, would amount to an equivalent of nearly USD 500 millions from Kenya and Uganda. In 2009, for example, South Sudan’s imports from Uganda, alone, amounted to USD 184.6 millions whereas imports from Kenya amounted to USD 144.5 millions. These amounts have significantly increased in the last two years, as South Sudan opens borders, with hopes to join the East Africa trade block.
Using a simple utilitarianism calculus to determine the net balance of trade, South Sudan would be better off because it exports more than it imports. Mr. Chol made the contrary conclusion here because he didn’t consider oil sector in his trade analysis. According to SSNBS, the balance of trade was a surplus of 20453.89 million SPD in 2011. If we consider only this information, and the fact that devaluation favors exports in the expense of hurting the imports, then we would, without constraint, support devaluation of SSP. But practically, devaluation makes South Sudan worse off for two reasons: (1) the country’s main export commodity is oil and (2) South Sudan is a small country to influence the world market prices.
Currently, the export sector is dominated by one commodity, oil. However, South Sudan, which produces 240,00bpd, is considered a small country in relation to the rest of her trading partners. For this reason its devaluation would be insignificant to influence world oil prices. Whether as a member of OPEC or as an independent exporter, and despite that oil prices would be rising due to inflation back home, South Sudan will continue to export oil at the same prices. For this reason the net balance of trade would shrink because the export revenue will remain constant when the imports would be increasing, both in short and medium term. Also, it is unreasonable to expect the oil prices to drop when transport cost through Port Sudan remains expensive.
Moreover, South Sudan’s oil production is soon expected to reach its peak at 527,000 bpd. According to 2011 predictions (when oil was produced at 490,000 bpd) production was expected to reach its peak in 2012, but was instead shutdown. If the contrary weren’t the case, oil production would have sharply declined from 2015. For this reason, South Sudan would be worse off in the medium run, whether in 5 or 10 years, assuming the imports remains constant. Therefore, the BoSS has to seek alternatives.
Non-oil sectors: Currently the non-oil sectors are developing gradually. According to the current statistics, non-oil sectors contribute less than 2 percent to the total revenue; however, these sectors show promising potentials to grow. At the current growth rate, devaluation, by itself, won’t stimulate these sectors to help the economy from collapsing after the oil decline. On the other hand if we consider devaluation as a tool to reduce imports, and if such theory holds in the long run (maybe 50 years), then the country would benefit from the non-oil sectors such as agriculture and tourism. Out of the 644,329 square kilometer, 37 percentage is arable land but only 4 percent of this portion is currently cultivated and mainly for livelihood. The country also has an estimate of between 10 to 20 million heads of cattle and large herds of wildlife. If these, among other sectors, are developed in the long run and imports are limited, then devaluation would be a good policy. In sum, the main factor to consider here would be the timing of devaluation.
Direct Foreign Investment: Direct foreign investment in South Sudan has been hampered by insecurity, poor infrastructure, corruptions and many other variables. From civil wars to tribal conflicts and rebellions, South Sudan has ever been that stable to attract foreign investments, except the greedy ones who want to seize the opportunities. However, we could hold these factors constant and only consider devaluation, but still the decision is self-defeating. Raising the SSP from its current band hurts the investors: it becomes expensive to invest in the country and also creates uncertainty. Nevertheless, this decision could spark similar decisions in parallel markets or even leads to contagion in the region, in the worse case. So, foreign investors are likely to divert their capitals to more economically stable countries.
Monetary and Fiscal Policy: The country’s financial policies, managed by the Bank of South Sudan (BoSS) have been defective over the last few years. The main malfunctions within the financial systems are attributed to the corruption from within the central bank, dependent on the oil revenues and high inflation rates. To stabilize the economy, these setbacks have to be resolved. The BoSS has worked tirelessly in the last few years, to overcome some of these challenges. For example (back in the good days of October 2011) 20 members of the central bankers were arrested over corruption cases, involving illegal dealings of foreign currency. The Central Bank did also increase its weekly money supply. These are reasonable management practices to eradicate corruption and to reduce inflation. But this did not completely solve the problems. The SSP continued to depreciate and was traded in the parallel markets at a rate much higher than the official rates.
The BoSS has struggled to derail the black market, until this week, when it seems to be loosing the fight. This devaluation, if not politically motivated, which seems not to be the case, then it was definitely an attempt to eliminate the parallel markets and not necessary to stabilized prices as argued on Sudan Tribune. This is a loose policy because there were better policies, such as the ones mentioned in the preceding paragraphs. In fact the central bank has successfully reduced the inflation from as high as 79.5 percent, in May 2012, to as low as -11.0 percent in June 2013. Although the margin between the official rate and parallel rate was still high, the BoSS would have reduced the margin by eradicating corruption within the Central Bank. As many analysts are convinced that those who have connections to the central bank, especially the politicians, are the ones feeding the black market, the BoSS would have closed all these windows and continue supporting the commercial banks. This would have been an efficient way to eliminate the parallel markets, without depreciating the currency. Devaluation in this regard is unreasonable management practice and a lost to fighting political influence and the black market. The politicians, the BoSS’ corrupt officials and the parallel markets, who are suppose to be the main victims of this policy, would find ways to circumvent the devaluation and the BoSS would be at odd. The circumvention could mean more corruption, further depreciation and inflation or whatever pays the lost. Furthermore, devaluation is almost irreversible, and so undesirable.
Inflation revisited: In September 2013, the inflation rate stands at -7.20 percent. Given that devaluing the SSP by over 40 percent could spark similar rate of inflation, the country’s inflation was going to be settled around 35 percent in the short run. Although developed countries like Canada regulate their inflation rate around 1.1 percent, averaging to 3.2 percent; a rate of 30 percent was not going to scare the South Sudanese enough. Compared to 65.55 of January 2012 (sparked by the oil shutdown and border crisis) or 79.95 percent of May 2012 (sparked by the Heglig war), this inflation rate could be tolerated in the short run, however, as political atmosphere keep boiling, the economic situation may get worse. The devaluation in this sense creates uncertainty and so could have only been adopted as a last resort.
Alternatives to devaluation: As discussed in some parts of this article and by Mr. Chol Kuch in his article other mechanisms could have been adopted instead. For example the central bank could continue injecting more foreign currencies into the market, supporting commercial banks, fighting corruption within the BoSS, fighting the parallel markets, supporting non-oil sectors and conducting more profound research. Like Mr. Biar, I believe eliminating the black market through the commercial banks would be more effective than fighting it through government interventions or any other non-market regulations. Instead of devaluation, the Central Bank could conduct open market operations or provides overnight rates to commercial banks, assuming that corruption is eradicated or minimal. For more information, please visits:
- Chol Kuch Chol-Mang’aai: http://newsudanvision.com/articles–publisher/2761-chol-kuch-chol-mang-aai-the-new-sudan-vision-newsudanvision-com-nsv?fb_action_ids=10152177027023814&fb_action_types=og.likes&fb_source=other_multiline&action_object_map=%7B%2210152177027023814%22%3A231439107015565%7D&action_type_map=%7B%2210152177027023814%22%3A%22og.likes%22%7D&action_ref_map=%5B%5D
- Peter Biar Ajak –Part 1: http://newsudanvision.com/commentary/2760-peter-biar-ajak-the-new-sudan-vision-nsv-newsudanvision-com
- Peter Biar Ajak – part 2: http://newsudanvision.com/commentary/2762-the-debate-south-sudan-in-defence-of-the-central-bank-s-devaluation-decision-part-2
- Trading economics: http://www.tradingeconomics.com/south-sudan/inflation-cpi
- Ichisaka, Kohei, 2012, The Monetary and Fiscal Policy of South Sudan: Analysis of a Newly Independent Oil-exporting country.
Deng S. Elijah is a senior at University of British Columbia and British Columbia Institute of Technology concentrating in Computational Intelligent, Computer Forensic and Economy. He can be reached at dengsimon2000 at yahoo dot com.