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      • Rerouting Southern oil: Empty threats or a promise to keep?

Rerouting Southern oil: Empty threats or a promise to keep?

The SPLM has repeatedly warned it will halt oil exports to the North if Khartoum continues to support armed militias in the South. The latest round of threats deals another blow to the North-South relationship.

Some observers view the Sudan People's Liberation Movement's (SPLM) threats to Khartoum as a worn-out tactic. But this mounting pressure is clearly hurting North-South relations.

Of all the roadblocks to peaceful co-existence between the North and the future South Sudan, the issue of oil is the most sensitive. The old adage defining oil as a blessing and a curse applies once again: Sudan’s black gold is a blessing because its presence was critical to the signing of the 2005 Comprehensive Peace Agreement (CPA), and a curse because any future wars would likely be over control of the wealth from those very oil fields.

It is difficult to gage the seriousness of Southern Sudan’s threat to re-route oil exports away from the North. Are we witnessing another round of empty taunts that serve as mere political prevarications? Or will the South translate its words into actions?  

Recent reports that China will extend oil pipelines from the South Sudan to the Indian Ocean have revived hopes of many Southerners that their future country will emerge as the only beneficiary of the oil revenues, without having to split their share with the North. On the other hand, while China is friendly towards Southern Sudan, a number of obstacles pose serious challenges to the Southern oil project.

One of them is the lay of the land: geologists say the difference in terrain, which is steeper in the South and flatter in the North, will complicate construction of the pipelines, which could take up to two years to build at an estimated cost of US$ 3 billion.

The huge distances involved pose the greatest logistical challenge to the realisation of the pipeline project, according to economist Dr. Issam Bob. Juba lies 1.600 km from the Indian Ocean and about 700 km from the Southern oil fields. Its location in the world's largest swamp area adds a further difficulty to the extension of pipelines through the region.

The least likely scenario is that the SPLM will disregard these considerations and move forward with the project. In this case, observers predict catastrophic developments, such as a resumption of war between North and the South, or a complete economic collapse of the North.

Public Economics Professor Hassan Bashir at Neelain University in Khartoum believes that without oil revenues to fund Khartoum’s general budget, prices would skyrocket. Coal, for example, would be unaffordable to many citizens. According to Bashir, this would trigger a series of reactions - including the imposition of higher taxes and fees – that could result in higher inflation rates, the expulsion of foreign investment, and ultimately a state of economic stagnation in the North.  

In light of this scenario’s bleak prospects, the prevailing trend is an appeal for prudence, with strong emphasis on the advantages of partnership and positive neighbourly relations between the north and south of Sudan.

Political strategist Dr Anwar Yusuf is mindful of the main motivation for the signing of the U.S.-backed peace agreement six years ago: both north and south were eager to benefit from oil revenues.  “Many members of the international community had an interest in greater stability in the region,” he said, “whether to increase their own investment revenues or to find an entry point to exploit Sudan’s abundant resources.”

All of these factors are still highly relevant now. Despite the imminent separation of north and south, both sides are likely to put their common interests above all other considerations.

 

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