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Longer, analytical article.  Sudan/South Sudan: A lose-lose scenario

Summary & Comment: "This AfricaFocus Bulletin contains a short op-ed commentary by Alex de Waal, an adviser to the African Union mediation team on Sudan, and excerpts from the transcript of a teleconference with Princeton Lyman, the U.S. special envoy on Sudan. Both reflect the African and international consensus urging both sides to compromise." GK

Author: Various Date Written: 30 January 2012
Primary Category: Sudan and South Sudan Document Origin: AfricaFocus Bulletin
Secondary Category: Eastern Region Source URL: http://www.africafocus.org/
Key Words: oil, economy


Printable Version
Sudan/South Sudan: A lose-lose scenario

Editor's Note

Sudan and South Sudan seem to have entered a "lose-lose" scenario, precipitated by failure to agree on payments for transport of oil from fields in South Sudan through the pipeline in the north to the Red Sea. Despite African Union mediation and pressure for compromise not only from Africa but also from the United Nations, China, and the United States, South Sudan has closed the oil fields, with likely disastrous economic and humanitarian consequences for both countries.

Oil is only one of the points of dispute between the two recently separated countries, which also include Sudan's brutal suppression of opposition in provinces adjacent to South Sudan, the status of Southerners still living in the North, and the disputed status of Abyei. On these issues, human rights groups fault principally the Sudanese regime in Khartoum. On oil, however, compromise on division of revenues seems to be the only option to avoid the loss of the major income producer for both countries. Even if the ensuing downward spiral does not result in renewed open warfare, it is hard to see how either party can gain from the current impasse.

This AfricaFocus Bulletin contains a short op-ed commentary by Alex de Waal, an adviser to the African Union mediation team on Sudan, and excerpts from the transcript of a teleconference with Princeton Lyman, the U.S. special envoy on Sudan. Both reflect the African and international consensus urging both sides to compromise.

For an alternative point of view, placing exclusive blame on the Khartoum regime, see Eric Reeves, "Oil Revenues Controversy," Jan 24, 2012 http://tinyurl.com/6wos2ks

A sampling of recent news articles on the oil dispute includes:

Reuters, "Sudan frees South Sudan's oil tankers; row continues," Jan 30, 2012
http://tinyurl.com/7mckpqs

"African Union Urges Sudan and South Sudan to Reverse Unilateral Actions," Jan 23, 2012
http://tinyurl.com/7zryab2

Reuters, "China Urges Restraint in Sudan Oil Transit Dispute," Jan 21, 2012
http://af.reuters.com/article/sudanNews/idAFL3E8CL04C20120121

For updated news and analysis on Sudan and South Sudan, visit http://www.sudantribune.com,
http://allafrica.com/sudan, and http://allafrica.com/southsudan

For previous AfricaFocus Bulletins on Sudan and South Sudan visit http://www.africafocus.org/country/sudan.phpand http://www.africafocus.org/country/southsudan.php

Update

Visitors to the AfricaFocus website using smartphones and tablets, many of them from African countries, have increased significantly over the last year, and now represent some 4% of website visits. To further facilitate such access, there is now a section of the site particularly adapted for mobile access: visit http://www.africafocus.org/index-mob.php

Meanwhile, a new report "How Africa Tweets," from a Nairobi- based communications research company, notes wthat Twitter use is rapidly increasing in Africa. The top countries are South Africa, Kenya, Nigeria, Egypt, and Morocco. See http://tinyurl.com/6sbnmbf

++++++++++++++++++++++end editor's note+++++++++++++++++

South Sudan's Doomsday Machine

By Alex de Waal

January 24, 2012

http://www.nytimes.com/ direct URL: http://tinyurl.com/6s2jbtl

Alex de Waal is the executive director of the World Peace Foundation.

South Sudan was born as an independent nation on July 9, 2011, with good will and a bounty. Three hundred and fifty thousand barrels of oil per day provided the government with $1,000 per year for each of its 8 million citizens.

But the only pipeline to market runs through northern Sudan, giving the government in Khartoum control over South Sudan's economic artery. And on independence day there was no agreement on the terms of pipeline use.

When Sudan was still one country, 50 percent of the revenue from southern oil went to the central treasury, comprising 40 percent of its budget. After July 9, Khartoum received nothing - not even a transit fee. International promises of debt relief and lifting economic sanctions, to fill a part of the budget gap, came to nothing. Continued negotiations - convened by the African Union High-Level Implementation Panel on Sudan, which is headed by former President Thabo Mbeki of South Africa and to which I am an adviser - have failed to resolve the issue.

On Jan. 20, South Sudan announced the dramatic step of shutting down oil production, with immediate effect. As oil money comprises 97 percent of the South's budget, it seems a suicidal step. The rationale is that for the last month, Khartoum has been diverting the oil to its own refinery and filling three tankers.

A year ago, President Omar al-Bashir congratulated his southern counterpart, President Salva Kiir, on independence and promised a new and peaceable chapter in the troubled history of north-south relations. This quickly turned sour, particularly with the outbreak of war in two areas of northern Sudan - Southern Kordfan and Bue Nile - where about half of the population is loyal to the former rebels of the Sudan People's Liberation Movement, who are now the government in the South. Although the northern branch of the party supposedly split off, the South does not disguise its solidarity with its former comrades in arms.

Khartoum's delegates to the just-concluding talks in Addis Ababa complain bitterly. "Why should we allow Southern oil to go free to market, when the money from its sales is used to arm rebels who want to destroy us?" They follow it up with a promise - we will reconcile our respective claims after we agree on a transit fee that matches a third of the budget gap.

The South counters, "Why do we allow our oil to be stolen and the money used to buy weapons to kill our comrades in arms? Khartoum has always wanted to control the South and its readiness to strangle us financially shows that they will never allow us to be truly free." The Southern government in Juba has floated plans for a new pipeline through Kenya. Optimistically, this may cost $3 billion to $4 billion and take three years to build, but many Southern leaders would rather leave their oil in the ground than submit to Sudan's coercion.

So South Sudan has set off its economic doomsday machine. The shutdown of wells is already beginning and within a week the oil companies will begin flushing the pipeline with water, so that the oil it contains doesn't jam and turn into a 600-mile asphalt tube. After that, the best case would be six months' work to reopen exports.

The South's lead negotiator, Pagan Amum, said he was at peace with himself when he explained: "This is a matter of respect. We may be poor but we will be free."

But South Sudan is a fragile state, as the recent interethnic killings in the Jonglei area show, and it will need massive foreign aid to compensate for the lost $650 million per month.

A northern general remarked, "The shutdown will hurt us but it will kill them." But Sudan cannot be stable if its southern neighbor is in crisis.

Based on its principle that Sudan and South Sudan should be two viable states, at peace and mutually supportive, the African Union panel has proposed an agreement. This will keep the oil flowing, stop the unilateral diversion of southern oil by the north, and provide enough funds to cushion the economic crisis in the north. China - the main buyer of Sudanese oil - the United States and the United Nations have endorsed the African Union's plan.

President Bashir and President Kiir are due to meet in Addis Ababa on Friday. This is the last chance, not only for the two to snatch a deal on oil, but also to stop an escalation into a wider north-south war. The two must step back from the brink.

Briefing on Issues of Ongoing Concern in Sudan and South Sudan

Special Briefing
Ambassador Princeton Lyman
Special Envoy for Sudan
Via Teleconference
January 25, 2012

http://www.state.gov/p/af/rls/rm/2012/182488.htm

Ambassador Lyman: Thank you very much. Thank you all for coming and being on the line. I wanted to just bring everybody up to date on a number of issues that we're following very closely related to Sudan and South Sudan. So let me discuss them briefly and then happy to take your questions about them.

One of the issues that we are extremely concerned about is the situation in the states of Southern Kordofan and Blue Nile. These are states in the Republic of Sudan; that is, the North. But a conflict has been raging there since last May, arising from issues never fully resolved in the civil war because people in those states, particularly in the Nuba Mountains, fought with the South. And though they remained in the North, their issues were to be resolved in a process called popular consultations. Those did not get finished and a conflict broke out. A very serious armed conflict broke out last year.

Now, what we are very concerned about right now is that there are predictions of a major humanitarian crisis in those areas, particularly Southern Kordofan. You know there's this predictive mechanism called FEWS NET, the Famine Early Warning System Network. They - if you go on their website, you'll see they have produced two maps, one the situation now - excuse me - and one predicting for March. By March, they feel that a large number of people, a quarter of a million or more, will be - will reach what they call emergency status, which is one short of famine. And this is very alarming to us.

We have strongly urged the Government of Sudan to allow international humanitarian aid – that is, World Food Program, UNICEF, et cetera – to come in, in all parts, across lines of whoever's holding territory. They have refused to do so. They don't want international involvement in this area, which they think is an internal matter and a conflict area. But we have been saying and saying to our African partners that we just can't - the world can't stand by and watch famine take place in an area, and know nothings being done.

So we've been working very hard, leading up the Africa Union meeting at the end of this month, to urge the Government of Sudan to open up international access and to do so soon. We're under a lot of pressure if that doesn't happen to look at other alternatives, but they all contain serious risks in doing so. So our preferred alternative - very far first alternative - is for the Government of Sudan to do this. The UN has made proposals to the government, but they haven't been accepted yet.

The second issue that I would like to touch on is a - ongoing negotiation and dispute between Sudan and South Sudan over the distribution of oil revenues and financing. You'll recall that after the secession of the South, 70 percent of the oil was in the South but all the infrastructure for exporting it - pipelines, et cetera - are in the North. So the two countries really are dependent on each other in the oil sector. It was also understood that when the North, now the Republic of Sudan, lost that much revenue there would be a transitional financial arrangement in which the South would ease that transition.

They've been negotiating and arguing over this for some time. The negotiations reached a very serious point in the last few weeks when the Republic of Sudan, in the North, began to divert Southern oil from the pipeline and to block ships with Southern oil from leaving the port, claiming this is a way to collect transit fees that they claim the South wasn't paying. And they imposed a fee of $32 a barrel, which is quite high, for that.

After negotiations, which are still going underway, failed to reach an agreement, South Sudan said, okay, we're going to shut off the oil, we're going to start closing the wells, and we'll suffer until we build a new pipeline through Kenya but we just can't take this anymore; they're stealing our oil.

It is a very bad situation, and both sides could get hurt very, very badly. The African Union High-Level Implementation Panel - this is the panel headed by Thabo Mbeki and former president of Burundi Pierre Buyoya and Nigerian former head of state General Abubakar - has been running negotiations on this in Addis. They're working very hard. They're very close to a proposal which should be able to reconcile the different interests and come up with a solution.

We're very concerned that this negotiation succeed and before too much damage is done to the oil sector and the infrastructure, that the South feels that they can stop shutting off the production and go back to full production. So this is a quite urgent matter on which we are working very hard.

The third area I want to touch on is the situation in Jonglei. That's a state in South Sudan. You'll recall about two weeks ago there was a major conflict between two ethnic groups, the Lou Nuer and the Murle. There have been attacks back and forth between these groups over cattle, kidnapping of women and children, et cetera. And in this latest incident, 6,000 or so young Nuer marched on the Murle to regain the cattle, to regain the people who were kidnapped, and we feared a major massacre.

Fortunately, with the help of UNMIS, et cetera, the Murle were warned in the town of Pibor. Most of them left, and after some skirmishing and some people getting killed, perhaps several hundred, the young Nuer have started to go back. But now the Murle are undertaking revenge attacks.

In the meanwhile, the people who fled Pibor are displaced people in various towns, and we think more are in the bush. So the UN, USAID, humanitarian NGOs are all working to try and reach these people and get them humanitarian assistance.

This is a situation that demonstrates the tensions and traditional and otherwise that exist in South Sudan that have sort of - were set aside in the campaign for independence and the successful independence July 9th but now, coming to the surface, demonstrate how much the Government of South Sudan must do to improve both its security sector capabilities, but also its outreach to these communities and conflict resolution and development programs here and elsewhere in South Sudan.

So I wanted to touch on all three of those, because they are all very serious situations on which we have been working very heavily here and in the field and in our diplomacy, both in Europe, the Arab world, Africa, et cetera. So let me stop there and open it up. Happy to take your questions.

Moderator: We'll go ahead and take a few questions from here in the room and then we'll turn it over to the callers. Does anyone here in the room first have a question? Andy, go ahead.

Q: Yeah. On the issue of Blue Nile and Southern Kordofan and the potential famine or food emergency, I'm wondering what you can tell us about the contingency planning, should Sudan continue to refuse access to aid groups. I understand that there has been some discussion of unilateral aid operations. Is that true? How is that possible without Sudanese Government approval? And how advanced are those - is that planning?

Ambassador Lyman: Well, we - right. We have said to the government in Khartoum for some time that we are feeling a lot of pressure if there's no international access to look at ways in which assistance would be carried across the border without their approval. But we know there are a lot of risks to that. We know the government would be opposed to it. We have to look at the possibility of it, but we've made no decision to do that because it has a lot of complications.

But at the same time, we're very worried about what happens if they don't allow international assistance, so we continue to press heavily for international accepted assistance by the government even as we look with a good deal of apprehension at what alternatives might be possible.

...

Q: And does the U.S. have an assessment of whether this potential plan from the AU, from the Mbeki group, let's call it, could actually work if some sort of resolution is reached between now and next Tuesday?

Ambassador Lyman: I only have the general outlines of the proposal. They're being presented today to the parties. But my information is that this proposal will address the basic concerns of the North and South; that is, how to assure that there's enough oil for the refinery in the North, which is a major concern of theirs, and a prospect of this transitional assistance while recognizing that the South has a legitimate claim about all this diverted oil and that has to be costed, and that the fees for transit are - that there's a mutual basis for determining those.

I haven't seen the details of the proposal. We think it's going to address all these things, and we hope once it's on the table that both sides will refrain from these kind of unilateral steps.

...

Q: I've got another one. On the oil, on South Sudan's decision to stop the oil production, in your view, how long can this go on? Number one, do you have any position on whether or not this was a wise bargaining move? Was this the right thing for them to do? Did they have any other option? And number two, how long can this go on before you start having very serious issues with the infrastructure and that it sort of really affects the viability of their finances?

Ambassador Lyman: I've heard mixed reaction - responses to that question. There is some feeling that in just three and a half days after they shut down the wells, you will get into a situation which will be very costly and timeconsuming to restore production. I've heard different assessments of the impact on the pipeline and the environmental damage, some predicting very serious damage and costs. Others are saying less so. I don't have a firm feeling, but there is a general feeling that it's going to be very costly.

Is it a good tactic? I was just in South Africa, as you know, Andy, and I was reminded that Nelson Mandela also often had to take the country to the brink but never crossed it, even in the most tense times. I think the Government of South Sudan was outraged and angry and took the situation to the brink, but I'm afraid in this they may be crossing over and costing themselves in the long run when they have so many development needs.

So I think I can understand the anger, I can understand the response, but I'm very worried that they go over the brink here and then have to pay a price that will hurt the people of South Sudan for a long period of time.

Q: Well, both in this case with the oil fees and with the fighting between traditional groups, does this suggest that perhaps the new government isn't quite capable of dealing with these very serious fundamental issues? And if it's not fully capable, what can the U.S. do to support them to prevent things from going over the edge?

Ambassador Lyman: I think the Government of South Sudan is faced with a number of challenges and still has a relatively thin layer of trained civil servants, professionalized military command and control systems, et cetera. And the country was so devastated by the civil war that there is just basic, basic development needs all throughout the country.

So I think the challenges are very great, and they must be able to dedicate their efforts, time, and resources to those demands. And that's why getting a resolution of this issue and not losing their main source of revenue for the next couple years is vital if they're going to be able to tackle this. And they're going to need a lot of help. They're going to need a lot of help to do this.

Q: How is the U.S. prepared particularly to help them develop a revenue stream, since I would imagine that things such as property taxes that we have here in the U.S. aren't as readily accessible for government operations?

Ambassador Lyman: Right now, oil provides 98 percent of the budget of South Sudan. And the other alternatives are still very, very underdeveloped. Most of the people live in the rural area. They're poor. It's not a commercialized agricultural sector. Even though there's potential there, they import most of their food. So there isn't really a solid tax base that can even begin at this point to compensate for the loss of oil revenue.

Now, we are helping, along with others, to develop agriculture. We had a big conference here called the South Sudan Engagement Conference, where we encouraged private sector investment. There was a lot of interest in it. I think over the longer term, they must diversify away from oil, but that's going to take several years at best.

Q: I'm just wondering if you could tell us a little bit about your - the tenor of your conversation with Khartoum these days. I mean, we have another report this morning that aircraft, presumably Sudanese aircraft, have bombed a refugee camp in South Sudan. This seems to be recurring practice. How are you reacting to that, and what's your message to them? And are they - what are they telling you?

Ambassador Lyman: Well, we are concerned about this. This is the second bombing of a refugee camp in South Sudan. It violates all the rules regarding refugees. And we have raised that, raised that in the UN Security Council as well as with the government in Khartoum. Their reaction has been mixed on the first incident. I haven't seen their reaction to this incident yesterday. But they went through a number of explanations on the last one, which - some of which were not credible, et cetera.

This is, again, as we've said to the government in Khartoum, an example of why this war is bad for everybody. And bombing South Sudan is only going to aggravate the situation. The Republic of Sudan claims that South Sudan is feeding this rebellion, and if that were stopped, the rebellion would end. That's just not accurate. Even if there were assistance from the South, that isn't what's at the heart of this conflict.

So we've raised this very much with Khartoum. They haven't appreciated our doing so, but we have. And we have continued to discuss with the Government of Sudan the importance of resolving the issues in Southern Kordofan and Blue Nile, that that these are getting in the way of our normalization process, and we'll continue to have that dialogue.

...

Q: Given all of these problems that you've just discussed, are you concerned that the - sort of the victory that was the July independence declaration and all of the work that went into that is in danger of being unraveled, that the Sudan project is, in both cases, South and North, is really at risk of going right back off the rails now?

Ambassador Lyman: I don't think either Sudan or South Sudan wants or intends to go back to full-scale war. I really - I'm almost totally convinced of that. That doesn't mean that they have a good relationship at all and that there aren't a lot of friction points on the border, over Abyei, over oil. And the relationship is bad. So there is a danger that things could get out of control, that incidents could lead to greater conflict. That's why these issues are so terribly important, not only in and of themselves but to prevent exactly what you're talking about. But I think both sides recognize that going back to full-scale war would be disastrous. So I think we still have to look upon that successful independence of the South as a great achievement and be thankful for it.

Printable Version

Disclaimer: Opinions expressed in this article are those of the writer(s) and not do necessarily reflect the views of the AfricaFiles' editors and network members. They are included in our material as a reflection of a diversity of views and a variety of issues. Material written specifically for AfricaFiles may be edited for length, clarity or inaccuracies.

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