Sudan's Divorce: A Messy Business

By Gerald Woels
Contributor
July 25, 2011

Divorce is a messy business, especially in international politics. In Africa, secessionist movements occur frequently but succeed rarely. However, one such movement, the Sudan People’s Liberation Movement/Army (SPLM/A), was recently successful in paving the way for South Sudan to secede from the north. But independence is not the end of South Sudan’s troubles.

The signing of the Comprehensive Peace Agreement (CPA) in 2005 ended the long civil war between the Sudanese government in Khartoum and the SPLM/A. After six years, South Sudan finally became an independent nation on July 9, 2011. Although independence is a significant achievement for South Sudan, the current economic situation will almost certainly lead to a return to conflict. Sudan will experience greater political instability in the aftermath of secession, as squabbling and infighting over the sharing of oil revenues continue to cripple and destabilize an already highly fragile economic and political environment. In order to create an environment of peace and stability, the two nations should aim to become less reliant on each other.

The problem stems from unequal distribution of oil resources and the means to transport that oil to world markets. Seventy-five percent of Sudanese oil is sourced from the newly independent Republic of South Sudan, and 98 percent of South Sudan’s GDP is generated through its oil production. Despite a historic lack of transparency in Sudanese oil production, both governments stand to generate vast income from oil production, which, in theory, should provide investment and prosperity to a region that has seen anything but for the past 60 years.
But South Sudan has no oil transportation infrastructure and is forced to pump the oil into a pipeline owned and operated by the north. As a result, in order to export oil and generate income, South Sudan is almost entirely dependent on the country from which they just seceded. This situation is ripe for exploitation. The north has already suggested South Sudan should pay hefty transit fees. Khartoum wants $15 per barrel of oil transported, when international norms suggest a fair market price would be closer to $0.41 per barrel. It is clear that the main source of tension will arise from the splitting of oil revenue.

In order to end its reliance on the north, South Sudan should build a pipeline through Kenya to the port of Lamu, streamlining its oil sales to other eastern African nations and providing access to the global oil marketplace. South Sudan could link such a pipeline with Uganda’s new found oil fields and thus provide Uganda access to global markets as well. It has been estimated that Uganda has the capacity to produce up to 200,000 barrels per day, and an alliance with the government of South Sudan may establish a new regional oil super player.

Critics would argue that such a plan would fuel tensions with Khartoum. They contend that it is crucial that the north and south remain dependant on each other, despite the problems already arising from South Sudan relying on the northern Sudanese infrastructure. Even if South Sudan pursuing alternative oil export options led to an increase in tension between the two countries, interested parties – especially China – could be relied upon to keep the peace.

As the nation that has done the bulk of foreign direct investment in the Sudan, China stands to lose a significant portion of that investment if the civil war flares up again. China’s relationship with the Sudan has been considered by many as a critical component in China’s drive to ensure sustained economic growth and energy security. Historically, China pursued a policy of noninterference in Sudanese politics in order to build a solid relationship with the government of Khartoum and, as a result, take advantage of favorable terms for oil exports. This need for reliable Sudanese oil exports means that China will help ensure relative political stability. For China, the top priority is that the north-south relationship remain stable enough for China to maintain access to crucial oil resources. However, China’s warming up to the South Sudanese government in Juba will send clear warning signs to the north. Controlling 75 percent of oil production in the former territory of Sudan has placed the government in South Sudan in a very strong position. It is also likely that China would side with the larger oil producer in a potential conflict regardless of past relationships. (For more on China’s role, see “How the Dragon Can Bring Peace to Sudan.”)

The north’s leverage over its new southern neighbor has been severely diminished due to the recent secession and division of the oil fields; however the north still controls South Sudan’s fate by virtue of controlling its only export option. If the south is able to find an alternative export option and drastically reduce its dependence on Khartoum, peace and stability may actually find a home in the Sudan.

Gerald Woels is a masters candidate at the Elliott School of International Affairs at George Washington University.

Photo courtesy of United Nations Photo via Flickr

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