Evidently not a real sovereign state, however the word is a pun on the suffix "stan", which is common in Muslim areas. Sand nigger is a term used offensively against Arab and/or Muslim people. So it means generically an Arab and/or Muslim country.
"look, if Muslims and Arabs hate Western culture and still live here, shouldn't they go back to sandniggerstan?"
by Yah-Yah-Roll! May 31, 2013