South Sudan and Sudan at brink again over oil

JUBA, South Sudan — “We will completely break relations with Sudan,” said Pagan Amum, South Sudan’s lead negotiator. “It is in our long-term interest to not cooperate with Khartoum.”

It was three days into the last round of talks between Sudan and South Sudan in Addis Ababa in late January. Amum had just emerged from a meeting in which he threatened to cut the flow of oil from the South to the North, the economic lifeblood for both countries. Days later, the shutdown began.

For the last year and a half, Sudan and South Sudan have been negotiating the arrangements of their separation, which occurred on July 9, 2011, including the amount of money the South should pay to pump its oil through pipelines in the North.

The negotiations have rested on the key assumption that both sides would work toward the viability of the other state, the conventional wisdom being that building on the existing economic linkages between the former civil war foes would encourage Juba and Khartoum to remain at peace with one another following southern independence. The two pipelines that connect oilfields in the South to a port and refineries in the North are the most visible manifestations of the ties that continue to bind the two countries. Cultural and historical connections between the two populations and a common 1,305-mile border were also reasons to believe that creating dependency between the two states would be the best means for establishing peaceful relations.

Juba’s decision to cut oil flow to the North has upset this dynamic.

“We reject the assumption that mutual dependency of our two nations is the path to peace. It is not,” said South Sudan President Salva Kiir in a recent statement to the press. In a game-changing move, the government of South Sudan upturned the foundation on which the international community has based its approach to South Sudan-Sudan relations.

The immediate cause for the South’s oil stoppage was Khartoum’s decision to confiscate what the South estimates to be $815 million worth of southern oil during negotiations. In response, Juba decided the only means of protecting its most valuable national asset was to keep it in the ground.

More importantly, the decision speaks to the deep-seated distrust that Juba has for Khartoum, and the view that the North has been, and will always be, an unreliable partner in the negotiation and implementation of peace agreements. Juba asks, exasperated and bitter after years of what it sees as subjugation to Khartoum’s aggressions and whims: “They have never engaged with us in good faith, why should we be expected to continue to deal with them now that we have the freedom to decide not to do so?”

But Juba’s decision is not purely defensive. The South calculates that an oil shutdown will ultimately hurt Sudan’s economy more than South Sudan’s, thus returning the advantage to Juba’s side in the North-South feud. However, Juba, too, stands to lose tremendously in the short-term. One of the world’s least developed nations, South Sudan has now shut off the source of 98 percent of its annual budget.

The distrust and emotional baggage from decades of war go both ways.

Economic mismanagement and the loss of oil revenues from the South left Khartoum with an economic crisis that threatens to destabilize the political patronage network on which the regime sits. Already, Khartoum faces a rebel movement mobilizing for regime change, calls for reform from detractors and allies alike, and shifting dynamics within the government itself. Despite the economic crunch, the government has been hesitant to adopt the full range of austerity measures necessary to alleviate the situation because the measures will be politically unpopular. Absent any international allies willing to bail it out, Khartoum has turned to Juba for what the regime sees as its rightful share of oil money.

Khartoum believes that Juba has been delaying an agreement on how much to pay for the transport of its oil as a means of further weakening Sudan’s economy, and thus the regime’s hold on power. Feeling that it could no longer afford to wait, Khartoum began to take payment in the form of southern oil, a move that also strengthened its hand at the table.

Above all, Khartoum is resentful that Juba is providing materiel support to rebels agitating for regime change in Sudan — undercutting, in Khartoum’s eyes, the South’s positions at the negotiating table. The North is also providing weapons to militia groups provoking instability in the South.

The outbreak of violent rebellion in Sudan marked a seismic shift in negotiating dynamics. The conflict raised the specter of regime change in Sudan, creating pressure for Khartoum to get as much as it can out of the talks, and prompting some in Juba to consider a future without Omar al-Bashir’s regime in the North. The promise of mutual viability was undermined.

Should Sudan-South Sudan relations remain broken, the international community faces a deeply isolated regime in Khartoum that will lash out against South Sudan with as much force as it can muster. Khartoum’s bombings of southern territory will likely intensify, as will the supply of arms to detractors of the southern government in South Sudan. Juba may be prompted to respond, and will, at a minimum, provide more support to armed opposition movements in Sudan. Tit-for-tat escalation to the point of direct hostilities is a possibility. Such a scenario is what the international community had hoped to avoid when it began backing the African Union panel in its efforts to broker an agreement a year and a half ago.

At this moment, the two parties are engaged in a last-ditch attempt in Addis Ababa to strike a deal. The signing of a non-aggression pact is a positive gesture, but without coordinated, and targeted international pressures, it appears all but impossible that the two sides will budge from their current positions on an actual deal. China, Ethiopia, and the United States, in particular, should be in the lead. Should no agreement or progress toward an agreement emerge, the chance for peaceful reconciliation around a negotiation table may be all but lost.

The biggest obstacle to a deal is not that an agreement palatable to both sides does not exist. The parameters of a possible comprehensive deal are clear. South Sudan could transfer to Sudan:

1) a fee, based on international best practices and industry standards for the use of oil infrastructure located in the North

2) a financial assistance package to address Khartoum’s economic situation that is tied to a final resolution on border disputes that addresses South Sudan’s territorial concerns.

Anything short of a comprehensive agreement will not be acceptable to Juba, which can only be compelled to offer billions of dollars in assistance to Khartoum if it receives something substantial in return, and reasonably so. A comprehensive agreement encompassing not only the oil dispute, but the other, key unresolved issues between the two parties is the only solution that will accommodate enough interests on both sides to make a deal viable.

If the current round of negotiations in Addis Ababa fails, the international community will have to devise a new negotiations model that accommodates the gaping rift between the two sides. A mediator with leverage to exert over the two governments, coupled with increased and sustained engagement on the part of key international stakeholders, will be necessary.

The premise that South Sudan and Sudan’s fates should remain interlinked should be also reexamined. Continued relations between the two states remain a reality, and the adage that economic linkages may encourage the two countries to remain at peace likely still rings true. But mutual dependency can only arise from mutual trust, a sentiment that is sorely lacking in North-South relations.

Amanda Hsiao is a Field Researcher with the Enough Project, whose mission is to end genocide and crimes against humanity.