Preventing the Oil Scenario from Repeating with Gold
By Sami Macki
A common error recurs whenever economic sanctions are imposed on a state: the assumption that issuing the decision automatically achieves its intended objectives. Experience, however, tells a different story. Sanctions represent only the opening phase of a larger battle, the battle to prevent their circumvention.
Sudan is no exception. When sanctions were imposed on the government of President Omar al-Bashir, focus centered on their political repercussions, while on the ground a new economic and commercial architecture was quietly forming. This system successfully redirected oil flows, production inputs, and financing through alternative channels.
Oil production did not halt, exports continued, and the fields remained operational. What changed were the commercial maps. Western companies withdrew, allowing China to expand significantly in investment, operations, and marketing. China became the primary supplier of equipment, spare parts, machinery, and chemicals essential for sustaining production. Meanwhile, networks of intermediaries and shell companies emerged to handle imports, exports, and financing beyond the reach of the targeted traditional channels.
This was not the full picture. Malaysia emerged as a key hub for managing portions of oil revenues and associated investments. Sudanese investments there expanded markedly, and a new class of affluent individuals accumulated substantial fortunes through the sanctions economy, often more than they had under normal market conditions.
The embargo thus gave rise to a parallel economy, created new beneficiaries, and redistributed wealth among networks equipped to operate outside imposed restrictions.
Today, facing European and American sanctions targeting networks linked to the war and gold, we must avoid repeating the same mistake. The networks — particularly those with Islamist affiliations — that managed the sanctions economy in the past have not disappeared. They have grown more experienced, better organized, and more adept at forging regional and international relationships. They possess enhanced capabilities to establish front companies, utilize intermediaries, and form alliances with opportunistic actors driven purely by profit, irrespective of political or ethical considerations.
Believing that imposing sanctions alone will automatically dry up funding sources is a dangerous oversimplification. Without rigorous enforcement mechanisms, including traceability of gold from mine to refinery and export markets, disclosure of beneficial ownership, and monitoring of shipping, insurance, and financial transactions, the outcome may prove counterproductive.
In many cases, sanctions transform into exceptional economic opportunities for networks skilled in evasion. Their wealth expands, while Sudan risks losing the added value of its new strategic resource -gold - just as it previously forfeited much of the value from its oil wealth.
History demonstrates that unmonitored sanctions do not eliminate parallel economies; they often expand them. They do not stop smuggling but may increase its profitability. They do not dismantle intermediary roles but frequently make intermediaries the most lucrative link in the chain. Ultimately, such sanctions fail to halt war financing or prevent the emergence of new transnational corruption empires within the war-and-graft trade.
The true measure of sanctions’ success lies not in the number of names added to designation lists, but in the imposing parties’ ability to pursue and dismantle the networks specifically designed to circumvent them.
Oil was the first major test. Gold is now the second. The question Europeans - and others - must urgently ask themselves is whether they have truly learned from experience, or whether they are inadvertently preparing the ground for yet another class of sanctions-era millionaires.
