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South Sudan: Peace, Power and Pipelines

By Patrick Smith
Posted on Wednesday, 6 July 2011 16:58

In his latest editorial from the July edition of The Africa Report, Patrick Smith says the decision by Sudan’s President Omer el Beshir and de facto security chief Nafi’e Ali Nafi’e to send government troops and bomber planes to the border regions has ensured a baptism of blood for the new state of South Sudan on 9 July.

Reaching agreement on managing the border and sharing the country’s oil wealth was always going to be difficult; in a climate of incipient war, it could be postponed indefinitely. Apart from the loss of thousands of lives and tens of thousands of homes, a great opportunity for both North and South to make the most of partition is being wasted.

As in any divorce, there are mixed emotions. In the South, it had been the hope of John Garang and the founders of the Sudan People’s Liberation Movement that they would create a “New Sudan”, a united country focused on development, not ethnic and religious division.

The SPLM leader in Northern Sudan, Yasir Arman, still has a substantial following. Also in the North, brave politicians such as the Umma party’s Mariam al-Mahdi, who was badly beaten up by security agents this year, lament the loss of the South and the failure to build a strong, united and tolerant Sudan.

Among the National Congress Party faithful in Khartoum, there must be grave concern about the economic perils ahead and what they might mean for the party’s grip on power. There have already been several demonstrations about the rising cost of fuel and food.

On paper, Khartoum is to cede its control of over two-thirds of Sudan’s oil production after 9 July. In practice, the two states have to cooperate: South Sudan will produce most of the oil, but North Sudan will have to transport it to the export terminal at Port Sudan.

Now there should be much greater accountability over the oil revenues and the two sides will have to reach some tough compromises on matters such as citizenship, security arrangements and the country’s US$38billion foreign debt. The Juba government understandably rejects any responsibility for debts racked up by Khartoum.

With some imagination, both parties and international financial organisations could craft a solution that would create real incentives for peaceful co-existence.

Khartoum’s finance minister, Ali Mahmoud Abdel Rasoul, offers a “zero option” – that is, Khartoum takes responsibility for all the debt, provided that creditors such as the IMF, World Bank and sundry commercial banks agree to a substantial debt-reduction policy. That might work with mechanisms such as guaranteed levels of state spending on health, education and water as well as governance criteria.

The bigger prize for the South, which would need the backing of the IMF, World Bank, US, China and the EU, would be to build its own oil and gas industry and send its exports through a regional network of pipelines shared with Uganda, Kenya and the DRC.

It may sound more pipedream than pipeline, were it not for the involvement of many hardheaded business minds from the China National Overseas Oil Corporation, France’s Total and Ireland’s Tullow Oil. All three companies, which are operating in Uganda, are planning to build a refinery at Lake Albert and run a pipeline to Kenya’s coast just outside Lamu. The project will take at least three years but would benefit hugely from cost sharing with South Sudan and Congo.

Not only could the project guarantee the supply of competitively priced fuel to surrounding countries, it would help knit together the East African Community and perhaps welcome South Sudan as the newest member of its ranks.

It might also concentrate the minds of politicians in both North and South Sudan on how both their countries could benefit from economic cooperation and linking their economies to a bigger regional market. The alternative is growing isolation, if not Armageddon.

This article was first published in the July 2011 edition of The Africa Report.

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