Sudan-South Sudan oil deal has its limits
Sudan and South Sudan reached a deal in the early hours of March 12, after a week of negotiations in Ethiopia's capital Addis Ababa, which should spark the beginning of exports of South Sudanese oil from Sudan's Port Sudan, on the Red Sea coast, for the first time in more than 15 months.
Companies are already gearing up for production from the oil-rich states of Unity and Upper Nile in the north of South Sudan, and the first shipments of oil are due to be made by the end of May. Yet although the resumption of oil will bring the first meaningful income to South Sudan since early 2012, as well as help ease a severe economic crisis north of the border, there is still a feeling that what has been left undone by the deal is just as significant as what has been achieved.
The deal marked a significant thawing of relations between the neighboring countries. It included a detailed schedule for the withdrawal of military forces from the land around the disputed border, where tit for tat fighting has plagued relations between the two states ever since the creation of South Sudan on July 9, 2011. The deal brought an end -- or at least a respite -- to Sudan's demands that South Sudan end its alleged support to the Sudan People's Liberation Movement North (SPLM-N), a rebel movement in the southern states of Sudan. And it paved the way for the resumption of oil exports, on which observers in South Sudan had almost given up. But the agreement suffered from the same problem as every deal reached between the two countries since the Comprehensive Peace Agreement (CPA) in 2005 brought an end to a civil war that had endured almost uninterrupted since 1955: it left the toughest issues for the future.
In the short term, the resumption of oil supplies will bring relief to what has been an unremittingly tough economic situation for both countries. South Sudan has had virtually no income since it stopped exporting oil, which accounted for 98 percent of the government's budget. For almost a year and a half, its economy has stayed afloat, courtesy of a combination of loans from China, Qatar, and other bilateral donors as well as aid from the United Nations and non-governmental organizations (NGOs). Sudan's economy has been even harder hit. The secession of South Sudan, which followed an almost unanimous referendum vote in favor of independence in January 2011, cost Khartoum three-quarters of its oil production and half its fiscal revenue, according to an IMF report published in November 2012. In January 2012, South Sudan ceased its oil deliveries after Sudan started to confiscate its neighbor's oil as compensation for what it claimed were unpaid transit fees. South Sudan responded by stopping pumping oil altogether, creating a standoff that months of negotiations failed to resolve.
Against this background, the new oil deal is a major breakthrough, and it brings hope of a revival in the economies of both countries. Recent statements by the two governments have suggested that when the flow of oil from South Sudan resumes, initial production will be in the region of 150,000 to 200,000 barrels per day (b/d). According to an economic advisor to the South Sudan government, this could increase to between 250,000 to 300,000 b/d in the coming months, compared to full production capacity of some 350,000 b/d. Production of 250,000 b/d would earn South Sudan more than $9 billion a year at the current oil price, while Sudan would earn more than $2 billion a year through a combination of transit fees for the use of its pipeline infrastructure and a $3.08 billion compensation package from South Sudan, payable at a rate of $15 a barrel.
In most respects, the deal signed in March was little more than a reprisal of an earlier agreement between the two countries reached in September 2012, also in Addis Ababa. But the more recent deal differed in one crucial aspect: it included a structured solution to the crucial issue of border security. The earlier deal was made dependent on security considerations that were never properly defined. Sudanese President Omar Bashir was quick to take advantage of the loophole, declaring that Sudan would not allow for the implementation of the deal unless South Sudan withdrew its support for the SPLM-N. This alleged support was hard to prove, but even harder to disprove.
The March agreement, by contrast, included a detailed framework for the withdrawal of troops from a demilitarized zone either side of a de facto border. The zone will be monitored by Ethiopian troops under the mandate of a U.N. observer mission already present in the border area: the U.N. Interim Security Force for Abyei (UNISFA). The two sides agreed to withdraw from the demilitarized zone by April 5, and the Joint Political and Security Committee, which includes representation from both countries, is due to meet on April 22 to discuss the findings of the UNISFA mission. "The monitoring mission will mean that it will no longer be possible for Sudan to claim that South Sudan is supporting the SPLM-N, so they no longer have an excuse not to implement the oil deal," said a source close to the Addis Ababa negotiations.
There were some positive early signs. Following visits in late March to a contested 14-mile area on the border of the South Sudanese state of Northern Bar al-Ghazal and the Sudanese state of South Darfur, a UNISFA spokesperson reported that there were "no armed forces from either side in the area." The UNISFA statement was corroborated by the Addis source, who said that the withdrawal of troops began "almost immediately after the signing of the agreement," and that there is "every indication" that both sides are taking the deal seriously. On April 12, Bashir made a much-delayed trip to Juba. Bashir said that the visit, his first since July 2011, marked the "normalization of relations" between the two countries and pledged that they "won't go back to war." U.N. Secretary-General Ban Ki-Moon said that he was "encouraged" by the positive dialogue between the leaders of the two countries.
But there are also signs that not everything is as rosy as it might appear. At the end of March, members of the Reizigat tribe, a nomadic tribe from Sudan, launched an attack on South Sudanese citizens in Kiir Adem, part of the 14-mile contested area. Several civilians and police officers were reported to have been killed by the attacks, which took place within days of the withdrawal of Sudanese and South Sudanese armed forces from the area. UNISFA has announced that it will send more than a thousand peacekeepers to the area, backed up by helicopters. But whether or not this particular flare-up can be calmed, it is symptomatic of the complicated relationship between Sudan and South Sudan, which for all the positives of the recent agreement, is likely to prevent peaceful and sustainable relations from being maintained in the years ahead.
Important as they are, oil supply and border security are just two of the strategic issues that the CPA set out to address in 2005. In order to pave the way for the peaceful secession of South Sudan, three crucial parts of the deal were shelved: the future status of the border territory of Abyei in the event of southern secession; the demarcation of the new border between the two states; and the debate over allowing a degree of devolution for the Sudanese states of South Kordofan and Blue Nile. The failure to resolve any of these issues has left a trail of problems that shows little sign of abating.
A roadmap for the resolution of the status of Abyei was agreed by Sudan and South Sudan in 2005 as part of the CPA, which determined that a referendum would be held on the future of the territory in parallel to that on South Sudan. Sudan, however, knew that if such a referendum went ahead, the territory would go to South Sudan, and did everything it could to obstruct the implementation of the deal. It protested the exclusion of the Misseriya, a nomadic tribe from Sudan that migrates to Abyei each year to graze its cattle, from the right to vote on the future of the territory. It reneged on an agreement to allow South Sudan to appoint the head of the Abyei Referendum Commission. And it rejected a July 2009 ruling on the borders of Abyei by the Permanent Court of Administration in The Hague that determined the region to be predominantly inhabited by the South's Ngok-Dinka tribe.
Since the South's secession, Khartoum has continued to undermine any deal on the territory. The African Union (AU) outlined a roadmap for the resolution of remaining issues on Abyei in April 2012, endorsed the following month by a U.N. Security Council resolution. On September 21, the AU High Implementation Panel issued a proposal on the final status of Abyei, which again defined Abyei residents as those who had "permanent abode." In October 2012, the AU gave the two sides six weeks to reach a consensus on the issue, only to lift the deadline in January when Sudan announced that it "categorically rejected the deal in its entirety." The two states have agreed to revisit the Abyei issue within the next month on the basis of the September 21 proposal, according to the Addis source. But few are optimistic that a deal will be reached any time soon. "Frankly I don't see any resolution to Abyei this year," said Douglas Johnson, a British-based Sudan expert, author, and independent advisor on the negotiation process.
Border definition is a still more difficult issue, involving five disputed territories -- not including Abyei or Heglig, another contested region rich in oil reserves. One of the five territories is the 14-mile area, which proved problematic in the negotiations over border demilitarization, and continues to disrupt relations between the two states. The presence of a U.N. border monitoring force is all very well, but seasoned Sudan observers say that any deal on demilitarization cannot be implemented while much of the border remains in the hands of rebel groups. The idea that UNISFA can effectively patrol a border that is over 1,110 miles long is "ludicrous" said one analyst in Juba.
The resolution of Sudan's internal disputes, meanwhile, remains as far away as ever. Promises included in the CPA to set up consultative assemblies in Blue Nile and South Kordofan were quietly ignored in order to allow for South Sudan's independence. This has had disastrous consequences. Sudan is now carrying out deadly attacks on its own population in the two states, including aerial bombing campaigns, and it has "tactically engineered humanitarian crises repeatedly in the Nuba Mountains and elsewhere," according to a report published by the International Crisis Group in November 2012. The government has refused to negotiate a peace deal with the two regions, and has reneged on commitments to allow access for humanitarian aid.
The oil deal is a step forward. But in order to take that step, all other elements of the negotiations have once again been sacrificed. The issues of Abyei and border definition have only been addressed in the now familiar manner of postponing the deadline for any agreement. More worrying still, Blue Nile and South Kordofan have once again been completely abandoned. The rebel SPLM-N movement has no incentive to stop its resistance to Khartoum's military subjugation of the two states, or to help protect a fragile peace between Sudan and South Sudan in the border regions. On the contrary, it has every reason to disrupt the recent deal, if only to remind the parties that their plight remains unresolved.
While the deal reached in Addis in March is positive in some respects, it demonstrates a continued failure to recognize that all aspects of the relationship between Sudan and South Sudan are interlinked. A failure to agree on a border security deal ultimately undermined the agreement to resume oil exports in September 2012. The failure to reach a peace agreement between Khartoum and the states of Blue Nile and South Kordofan continues to undermine border security, demilitarization, and border definition. And while conflict continues on the border, it is only a small step for Khartoum to resume its accusations that Juba is supporting the SPLM-N, and to continue its support for rebel movements in South Sudan. Without a comprehensive resolution of these issues, there can be no trust between Sudan and South Sudan. And without that trust, any deal that is reached is in danger of collapsing at any time.
Richard Nield is an independent journalist and analyst specializing in the Middle East and Africa, and an expert commentator on Sudan and South Sudan.
- Database Search
- Unpaid Debt A comprehensive overview of the role of the Lundin Consortium in the oil war. ECOS calls upon the Swedish, Austrian and Malaysian governments to investigate whether, as a matter of international law, Lundin, OMV and Petronas 'were complicit in the commission of war crimes and crimes against humanity by others during the period 1997-2003.’ In response, the Swedish Public Prosecutor for International crimes opened a criminal investigation into ‘links between Sweden and the reported crimes’.
- In Depth For more specific information about the Lundin court case please visit the Unpaid Debt dossier.
