South Sudan is back in the international news. For good or for ill (I'm not sure which), the massive fighting between the Lou Nuer and the Murle over the past five weeks only barely scratched the screen through which the internationally aware see the world. If you want one important thing to pray for in South Sudan, pray for a peaceful resolution to that conflict and a way forward with strong rule of law. If you want to pray for Sudan, pray that its government refrains from attacking the Nuba Mountains and that it will cease and desist from all its internal wars. But the newsworthy item is South Sudan's recent decision to stop producing oil.
The news, even in the press here, is oil. South Sudan has recently decided to stop producing it, in spite of the fact that oil revenue accounts for approximately 97% of its national income. That gets you in the news. And it gets assurances from companies, diplomats, and even the head of the UN that they want to help you resolve your differences. And that they (really, really) want the oil to keep flowing.
Chevron discovered oil in what is now South Sudan in 1978. By 1984, a combination of public opinion pressure due to Sudanese human rights abuses and insecurity due to southern rebel attacks forced them out. The Sudanese and South Sudanese oil industry went to Canadian (Talisman), then Indian (OVL), French (Total), Malaysian (Petronas) and Chinese (CNPC) firms. Atrocities against the local populations, environmental degradation, and rebel attacks continued. A colleague of ours researching the industry this year went to some of the oil fields and said he had never before seen either a) such poverty and degredation as was to be found near the oil fields, or b) gold-leaf toilets like the oil companies had installed in the nearby airport. Oil revenues didn't actually start coming in to Sudan's treasury until 1999. The civil war continued until 2005, and for the intervening six years, the South mostly saw their oil wealth coming back to them in the form of very fast-moving bullets. From 2005 to 2011, they technically got half, but the open secret was that it was more like a third, since the North always misreported.
Fast forward to 2012. Sudan and South Sudan have been engaged in fruitless negotiations over oil transit fees for months. Sudan, which of course only built infrastructure heading north, to Port Sudan on the Red Sea, demands $36/barrel in transit fees (recent prices have been in the vicinity of $100/barrel). South Sudan wanted 74 cents a barrel, which strikes me as low, but is still nearly twice what Chad and Azerbaijan pay Cameroon and Georgia+Turkey, respectively. In early January, to make up for what they called Southern intransigence, Sudan announced that it would be stealing oil from the pipeline and marketing it directly. It also detained three container ships carrying Southern crude so that they couldn't pay South Sudan $815 million for the export. So the South decided to shut down the wells and close the pipes. The world was most put off.
Alex de Waal, who I respect greatly as an intelligent, and usually very astute observer of Sudan and South Sudan, called this move "South Sudan's Doomsday Machine" in the New York Times. He quotes a northern general saying, "This may hurt us, but it will kill them." He's wrong. Probably because he thinks that Khartoum is really in control. If you've been studying Sudan for decades, this is a reasonable assumption. The Sudanese government has a great understanding of local and international factions, and is quite the puppeteer when it wants to be. But de Waal--and many other writers on the subject--extrapolate from the past too much with internationally ambiguous lines like, "China — the main buyer of Sudanese oil — the United States and the United Nations have endorsed the African Union’s plan." Which oil is that again? I thought we were talking about South Sudanese oil.
An Institute for Security Studies paper argues opposite the general that, "While Juba's resolution to halt oil production may have dire consequences for South Sudan in the short-to-medium term it may produce long-term strategic benefits. The reverse may be the case for Khartoum." That's someone who understand not only paper budgets, but ongoing realities. I hear the argument that shutting down the oil pipeline is ungrateful to South Sudan's very generous donors, but Sudan, which needs that money to keep its three-to-five wars going isn't exactly winning global steward of the year award either. And as a citizen of a donor and ally, I'm with Juba. Cutting off the oil is dangerous, but only because there's a possibility the north will invade its oil fields in a desperate attempt to keep its malice accounts in the black, not because the South is going to be the one bringing ruin on itself. South Sudan's leaders may sometimes be big men, but they're not yet so fat that they're lying when they say, "We may be poor, but we will be free."
- John
image courtesy southsudaninfo.net
The news, even in the press here, is oil. South Sudan has recently decided to stop producing it, in spite of the fact that oil revenue accounts for approximately 97% of its national income. That gets you in the news. And it gets assurances from companies, diplomats, and even the head of the UN that they want to help you resolve your differences. And that they (really, really) want the oil to keep flowing.
Chevron discovered oil in what is now South Sudan in 1978. By 1984, a combination of public opinion pressure due to Sudanese human rights abuses and insecurity due to southern rebel attacks forced them out. The Sudanese and South Sudanese oil industry went to Canadian (Talisman), then Indian (OVL), French (Total), Malaysian (Petronas) and Chinese (CNPC) firms. Atrocities against the local populations, environmental degradation, and rebel attacks continued. A colleague of ours researching the industry this year went to some of the oil fields and said he had never before seen either a) such poverty and degredation as was to be found near the oil fields, or b) gold-leaf toilets like the oil companies had installed in the nearby airport. Oil revenues didn't actually start coming in to Sudan's treasury until 1999. The civil war continued until 2005, and for the intervening six years, the South mostly saw their oil wealth coming back to them in the form of very fast-moving bullets. From 2005 to 2011, they technically got half, but the open secret was that it was more like a third, since the North always misreported.
Fast forward to 2012. Sudan and South Sudan have been engaged in fruitless negotiations over oil transit fees for months. Sudan, which of course only built infrastructure heading north, to Port Sudan on the Red Sea, demands $36/barrel in transit fees (recent prices have been in the vicinity of $100/barrel). South Sudan wanted 74 cents a barrel, which strikes me as low, but is still nearly twice what Chad and Azerbaijan pay Cameroon and Georgia+Turkey, respectively. In early January, to make up for what they called Southern intransigence, Sudan announced that it would be stealing oil from the pipeline and marketing it directly. It also detained three container ships carrying Southern crude so that they couldn't pay South Sudan $815 million for the export. So the South decided to shut down the wells and close the pipes. The world was most put off.Alex de Waal, who I respect greatly as an intelligent, and usually very astute observer of Sudan and South Sudan, called this move "South Sudan's Doomsday Machine" in the New York Times. He quotes a northern general saying, "This may hurt us, but it will kill them." He's wrong. Probably because he thinks that Khartoum is really in control. If you've been studying Sudan for decades, this is a reasonable assumption. The Sudanese government has a great understanding of local and international factions, and is quite the puppeteer when it wants to be. But de Waal--and many other writers on the subject--extrapolate from the past too much with internationally ambiguous lines like, "China — the main buyer of Sudanese oil — the United States and the United Nations have endorsed the African Union’s plan." Which oil is that again? I thought we were talking about South Sudanese oil.
An Institute for Security Studies paper argues opposite the general that, "While Juba's resolution to halt oil production may have dire consequences for South Sudan in the short-to-medium term it may produce long-term strategic benefits. The reverse may be the case for Khartoum." That's someone who understand not only paper budgets, but ongoing realities. I hear the argument that shutting down the oil pipeline is ungrateful to South Sudan's very generous donors, but Sudan, which needs that money to keep its three-to-five wars going isn't exactly winning global steward of the year award either. And as a citizen of a donor and ally, I'm with Juba. Cutting off the oil is dangerous, but only because there's a possibility the north will invade its oil fields in a desperate attempt to keep its malice accounts in the black, not because the South is going to be the one bringing ruin on itself. South Sudan's leaders may sometimes be big men, but they're not yet so fat that they're lying when they say, "We may be poor, but we will be free."
- John
image courtesy southsudaninfo.net
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