April 27, 2017 / 1:30 PM / 5 months ago

Egypt-Sudan trade held hostage as political tensions simmer

* Sudan banned all Egyptian agricultural goods in March

* Traders say Egyptian media comments deepened spat

* Guidelines on what products banned remain unclear

* Saudi’s Savola may re-route sugar exports

By Eric Knecht and Khalid Abdelaziz

CAIRO/KHARTOUM, April 27 (Reuters) - When Egyptian media began making Sudan and its smaller if more numerous pyramids the subject of jokes on nightly talk shows recently, Sudanese were not amused.

Commodity traders weren’t either. They say growing tension between the neighbouring states, deepened by a recent media spat, has led to mounting trade restrictions that are now throwing their businesses into disarray.

“They say those are pyramids. Don’t laugh. Those are cheese triangles,” said an Egyptian pundit describing Sudan’s ancient Meroe pyramids.

The comments were prompted by Sudan’s decision to place a blanket ban on all Egyptian agricultural goods last month, ramping up restrictions it first imposed in September to block Egyptian fruits, vegetables and fish on health concerns.

Hany Hussein, executive director of Egypt’s Agricultural Export Council, says that seven months after the initial import restrictions, Sudan has yet to provide any explanation as to what is actually wrong with the Egyptian goods.

“We want to keep working with Sudan as it’s a very important market, but we’re waiting to know what the issue is.”

Traders say the media war of words has suddenly made the situation worse, with guidelines on what products can be sold over the border increasingly unclear and no resolution in sight.

“It’s a big mess..trucks have been waiting outside Sudan carrying Egyptian goods unable to enter,” said one Egyptian trader with business in Sudan.

Analysts say the trade restrictions are largely political and tied to a litany of Sudanese grievances, from disputed land in Egypt’s south to Egypt’s refusal to drop strict visa requirements on Sudanese nationals while granting residency to opposition figures.

“When there’s tension, Sudan of course uses what tools it has to create pressure,” said Attia Essawy, an expert on African affairs.

Sudan, its economy shaken by the 2011 secession of the south, finds itself in confrontation with a neighbour far wealthier and more powerful. Its population a bit less than half of Egypt’s 92 million, it has relied on Egypt as a top import destination for many food items.

Sudan imported about $591 million worth of goods from Egypt in 2016, most of which were food items like vegetables, fruit and biscuits, said Ahmed Hamid, a director at Sudan’s Ministry of International Cooperation.

Egypt’s agricultural exports have surged since it floated its currency in November, allowing it to roughly halve in value and making its goods instantly more attractive on world markets.

CAUGHT IN CROSSFIRE

Recent actions can rebound on Sudanese businessmen.

Sudanese importer Babkir Adam Wali said his 12 million Sudanese pound($1.8 million) shipment of Egyptian biscuits and sweets has been stuck since March 10.

“I‘m paying 30,000 Sudanese pounds per day for trucks carrying these goods inside Sudan, and I have bank loans guaranteed by these goods. If they don’t enter before their expiry date, I’ll have a financial crisis,” said Wali.

Even larger companies have been caught in the crossfire, like the Saudi Arabian Savola Group, which will have to re-route much of its Egypt-based sugar production that is normally sold to Sudan, according to a company source.

Savola imports raw Brazilian sugar and refines it in Egypt for export to other destinations, meaning the banned sugar is not even Egyptian.

“The guidelines are not clear at all, so at the moment we might consider fulfilling our Sudan contracts from our Saudi-based plant,” the company source said.

Egyptian Foreign Minister Sameh Shoukry paid a rare visit to Khartoum last week to smooth over relations.

Sources close to the visit said the trade issue was at the top of the agenda, but comments by Shoukry and his Sudanese counterpart offered no mention of a resolution.

Instead, Sudanese Foreign Minister Ibrahim Ghandour reiterated concerns that “ campaign by Egyptian media against Sudan exceeded what is reasonable and conventional. It went beyond criticism to abuse of the Sudanese people,” he said.

Additional reporting by Maha El Dahan in ABU DHABI and Arwa Gaballa in CAIRO; editing by Ralph Boulton

Our Standards:The Thomson Reuters Trust Principles.
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