Economics Made Economical

Sudan: Why Do Economic Sanctions Work?

The USA and other nations around the world essentially donate horrible regimes billions of dollars every year in the form of oil money. Some of the world’s most corrupt governments have been longtime members of OPEC, an illicit cartel that limits oil supply levels and agrees for all its member states to sell the produced oil at a fixed price.

Cartels are illegal according to the World Trade Organization, as their structure is essentially monopolistic and/or communist, as opposed to the fairer competitive market capitalism structure. In OPEC’s case, given the member states’ typical control over the oil industry, we get the worst of all worlds–a government-owned monopoly.

Such unsavory leaders as Iraq’s Saddam Hussein, Libya’s Moammar al-Qadhafi, Iran’s Ayatollah, and North Sudan‘s Omar Bashir have been just some of the more recent examples of the types of people who’ve been artificially manipulating global oil production and cost levels via OPEC. The former leaders of both Iraq and Libya had been economically sanctioned by market-based and democratic societies around the world, and have since been deposed of–and disposed of– by their own citizens. Similar global sanctions and uprisings have taken place recently against the Iranian regime.

Most recently, as black Christian South Sudan has broken away from the Bashir-run Arab Muslim northern Sudan, sanctions have been implemented against the Bashir regime as well. South Sudan, unlike its northern neighbor, is not an OPEC member. It’s also home to most of the formerly united nation’s oil reserves.

In a panic that has resulted from South Sudan’s recent independence, the Bashir regime has demanded oil transport/export fees and other undeserved “perks” from the landlocked South. The South has begun to respond by simply working with its other neighbors, such as Kenya, Tanzania, and the Congo, to build newer, better, more efficient pipelines that transport the South’s oil to a coastal port within their more capitalistic and democratic neighbors.

Who has lost out? Ultimately Bashir and the rest of North Sudan’s regime. As an unelected dictator with a penchant for murdering his own people, the Bashir regime hoarded its former oil income. Even unlike other OPEC states such as Kuwait, Saudi Arabia, Venezuela, and the UAE, oil money has never been shared among Sudan’s civilian populations. South Sudan has realized that their oil travels farther and faster (and more profitably) when it gets to “shop around” for the best bargain on pipeline and exportation fees, and have concluded that caving to Bashir’s demands is simply not in their society’s best interest.

Who will benefit most?

South Sudan’s oil industry (and– as long as its government remains transparent, democratic, and relatively market-based–its civilian populace) will benefit most. As will the Kenyan, Congolese, and Chadian pipeline manufacturers, refiners, portsmen, boat loaders, boat captains, and any/every other African citizen involved in the chain of moving crude oil from the ground beneath South Sudan to its final destination as usable gasoline. Who will benefit most then? The average African entrepreneur, businessman, civilian, and ultimately the entire nations of much of sub-Saharan Africa.


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