- Over half of Sudan’s gold is smuggled out of the country with the proceeds going to finance internal conflict.
- Last year, Sudan’s Central Bank banned the export of gold by government agencies and foreigners, individuals, and companies.
- The directive, however, excluded concession companies operating in mining.
Lack of a well-coordinated management in the port of Djibouti is turning out to be a benefit for Russia, which is expanding its influence over Sudan’s gold reserves while solidifying its superpower standing in the Middle East.
These revelations are in a new report published by the Pangea-Risk, a specialist intelligence company. The report is offering analysis and forecasts on political, security, and economic risk in Africa and the Middle East.
The report comes weeks after the Wagner Group threatened to topple Russian President Vladimir Putin. With a power struggle in Moscow, Wagner’s clients are in a tailspin, unsure of the future of their security partnerships.
Weak management at the Port of Djibouti under the country’s ports and free zones authority chairman Aboubakar Omar Hadi is allowing the proliferation of illegal, unreported, and unregulated fishing activities, and weapons smuggling, the report notes.
“The Russian military and the Wagner Group, therefore, have increasingly sought to take advantage of this situation, by for example seeking access to ports in Sudan,” the report indicates.
Wagner Group in Sudan
The Wagner Group, a private military contractor based in Russia, has been active in Sudan since late 2017. The report cautions that if Putin fails to agree with Wagner chief Yevgeny Prigozhin, Chinese private military companies that are also active in the Red Sea will seize the strategic commercial and security opportunities at the Djibouti port.
Prigozhin was a close confidant of the Russian President until he launched a rebellion in June 2023.
The Wagner Group is providing powerful weapons, including surface-to-air missiles, to Sudan’s paramilitary Rapid Support Forces. The secretive group is backing Mohammed Hamdan ‘Hemedti’ Dagalo, in the Sudan conflict.
These weapons were allegedly sourced from the Wagner Group’s munitions stocks in the Central African Republic (CAR) and transferred through its installations in Libya.
“The motive behind this support lies in Wagner’s perception of Hemedti as a desirable partner due to his involvement in gold smuggling and resistance against a democratic transition,” the report says.
Russia’s strategic interests
It further notes that by covertly aiding Hemedti, Prigozhin seeks to position himself as a foreign policy asset advancing Russia’s strategic interests and consolidating his influence against rivals in the Russian foreign and defence ministries.
The covert support provided by Wagner to Hemedti contradicts Russia’s publicly declared position advocating for dialogue among the parties.
Although Russian Foreign Minister Lavrov extended a warm welcome to Hemedti in Moscow, he also met with Sudanese Armed Forces (SAF) leader General Abdel Fattah Al Burhan during his visit to Khartoum.
This contrasting behavior highlights the underlying tensions within Russia’s approach to the Sudan conflict.
Prigozhin’s endorsement of Hemedti aligns with his personal and domestic ambitions, seeking to achieve a triumph that consolidates his authority while undermining his competitors.
“Such an outcome would solidify Russia’s control over Sudanese gold reserves, indirectly financing Wagner operations in Ukraine and enhance prospects for establishing a Red Sea naval base in Sudan, potentially staffed by Wagner Group,” the report states in part.
US sanctions on Russia
In Sudan, Prigozhin’s main vehicle is a US-sanctioned company called Meroe Gold, a subsidiary of Prigozhin-owned M-invest. It extracts gold while providing weapons and training to the country’s army and paramilitaries, the report notes.
Russia is known to have actively supported Sudan’s 2021 military coup which overthrew a transitional civilian government.
“We’ve long known Russia is exploiting Sudan’s natural resources,” one former US official told CNN last year. He noted that in order to maintain access to the resources, Russia encouraged the military coup.
Russia’s meddling in Sudan’s gold began in 2014 after its invasion of Crimea prompted a slew of Western sanctions.
Gold shipments proved an effective way of accumulating and transferring wealth. And this bolstered Russia’s state coffers while sidestepping international financial monitoring systems.
Gold smuggling as poverty strains Sudan
At the onset of the Russia-Ukraine war, Russia reportedly entered into a secret pact with Sudan’s beleaguered military leadership. The deal enabled billions of dollars in gold to bypass Khartoum, depriving the poverty-stricken country revenue.
In exchange, Russia has lent powerful political and military backing to Sudan’s military leadership. At the moment, the Russia-backed wing is fighting the country’s pro-democracy movement.
Meanwhile, Wagner’s strategic objectives revolve around extending the conflict and enhancing Hemedti’s leverage. Nevertheless, if Wagner forces were to withdraw, the RSF would become exposed and vulnerable, the report noted.
This withdrawal could potentially upset the existing power equilibrium in Sudan, putting at risk all parties engaged in the conflict. As for Russia’s interests in Sudan, the country’s military has been pursuing access to the Red Sea for both commercial and military reasons.
To attain this goal, Russian Private Military Companies are actively pursuing contracts in Yemen, taking advantage of the country’s protracted civil war.
Red sea maritime region
Due to the insufficient governance of the Red Sea maritime region and Djibouti’s porous port security, Russia is gaining influence in this crucial waterway.
However, it is not all rosy for the Russia-backed players. Currently, Wagner is facing an internal power struggle. Along with potential leadership threats in Russia, Wagner’s weaknesses pose significant consequences for regional stability in several countries.
These includes Djibouti, Sudan, Libya, the Central African Republic, Madagascar, Eritrea and Yemen. “The resulting outcomes are poised to mould the geopolitical terrain and influence the dynamics between Russia and the region,” the report elaborates.
Sudan has reported a rise in gold mining, becoming Africa’s third largest producer of the mineral in the last decade. Surprisingly, poverty in the country continues to grow. Currently, Sudan is ranking 172 out of 191 in the UNs Human Development Index.
According to the World Bank, Sudan’s population living below poverty increased from 15.3 percent in 2014 to 32.9 percent in 2022.
Poverty amid rising gold exports
This means around 15 million people are living on less than $2.15 a day, even as the Sudanese Mineral Resources Company announced the production of more than 18 tonnes of gold in 2022.
This was the highest productivity in the history of the mineral sector in Sudan, according to official data.
The Director of the General Administration for Supervision and Control of Production Companies, Engineer Alaeldin Ali, noted in the first quarter of this year, that productivity increased by one tonne and 611 kilograms.
This is compared to the highest production in the last period, which was achieved in 2019.
The 18 tonnes and 637 kilograms of gold produced in 2022 originated from the production of the organised sector of concession companies and firms dealing with traditional mining waste.
Reports show that half of Sudan’s gold is smuggled out of the country with proceeds going to finance internal conflict.
Last year, Sudan’s Central Bank banned the export of gold by government agencies, foreigners, individuals, and companies. This, however, excluded concession companies operating in mining. The circular also limited Central Bank of Sudan’s role to purchasing gold for building reserves only.
Also Read: Tanzania betting on gold reserves to stimulate mining sector