FACTBOX-Key political risks to watch in north and south Sudan
Tue Nov 8, 2011 8:40am GMT
By Ulf Laessing
KHARTOUM Nov 8 (Reuters) - North and South Sudan face disputes over sharing
oil revenues and ending fighting on both sides of the joint border after
southern independence in July as both nations seek to overcome serious
economic challenges.
Sudan's south became independent on July 9 after voting in a January
referendum agreed under a 2005 peace deal to part from its former civil war
foe.
But they have so far failed to sort out major economic issues such as
dividing oil revenues and other assets, coordinating the launch of their new
currencies and resolving disputes over the border or the contested Abyei
region.
Assets at stake include millions of acres of fertile land, gold, oil and the
waters of the river Nile.
Following are factors to watch:
NORTH-SOUTH DISPUTES
Southern President Salva Kiir visited Khartoum in October in his first visit
since southern independence, allaying fears of a return to civil war.
But both sides have failed to reach an agreement how to divide up oil
revenues, the lifeline for both economies. Around 75 percent of the
country's 500,000 barrels a day oil production now comes from the South.
The South is seeking to pay less than the 50 percent transit fee agreed
under the 2005 peace deal but needs to use the North's pipeline, refineries
and port to sell the oil.
Both sides have also failed to coordinate the launches of their new
currencies, which is hampering cross-border trade due to a lack of bilateral
trade agreements.
On the political front, both countries have not reached an agreement on the
contested Abyei region into which the north sent troops and tanks in May,
triggering the exodus of tens of thousands civilians. The U.N. Security
Council has now deployed Ethiopian peacekeepers to Abyei but the Sudanese
army has not withdrawn yet.
Fighting between the northern army and armed opposition in the border area
has spread to the northern state of Blue Nile neighbouring South Kordofan
where fighting broke out in June. The joint border needs marking, too.
What to watch: -- Continued meetings. The worst moments of the past years
came when the parties stopped talking. A series of high-level meetings would
promote confidence.
-- Will fighting spread further? Rebels in Darfur, scene of a separate
insurgency, have said they want to form an alliance with armed groups in
Blue Nile and South Kordofan. How realistic is such an alliance ?
-- Oil revenues. Any details or signs of escalation over the transit fee the
South will have to pay. Any signs that the North will stop southern exports.
-- Abyei. Will both sides agree on a referendum that was supposed to happen
with the southern independence vote?
-- Nile water. Sudan's split has created a new country in the Nile Basin.
There is a bitter dispute between Egypt, which refuses to give up its major
share of the Nile waters, and other basin countries which suffer drought and
famine. South Sudan is likely to support its East African neighbours.
ECONOMIC CRISIS
After years of relying on oil revenues, which make up more than 90 percent
of Sudan's exports, the growing import bill has caught up with Khartoum.
Banks are unable to meet the demand for foreign currency in the country,
forcing an effective devaluation of the Sudanese pound and driving up
inflation.
Khartoum has avoided an "Arab spring", witnessing only small protests, but
many ordinary Sudanese fret about annual inflation hitting almost 21 percent
in September from 15 percent in June. In November, inflation was 9.8
percent.
The Sudanese pound has suffered a slide on the key black market due to a
shortage of dollars. With oil revenues expected to fall it will be harder
for the government to get foreign currency needed for food and other
imports. Plans to diversify the economy are in an early stage.
The United States just renewed a trade embargo, shutting off the north from
international markets, making borrowing to fund its budget deficit
difficult.
The central bank has said expenditures will need to be cut by more than 25
percent this year.
What to watch:
-- Will the Sudanese pound fall further in the north? That would hit Sudan's
ability to buy imports. Will food inflation rise further?
-- Any signs of protests after Khartoum saw several small anti-government
demonstrations in recent weeks? -- By how much will Khartoum have to cut
spending at a time of grave challenges as oil revenues are expected to fall?
SOUTH SUDAN
South Sudan in 2005 was one of the least developed regions in the world. The
southern ruling Sudan People's Liberation Movement (SPLM) has struggled to
find the calibre of people to run a government and to entice talented
members of the southern diaspora back home. So development has been very
slow.
Politically and militarily the south needs to ensure it opens a dialogue
with the opposition to build the kind of multi-party democratic state donors
will want to see in return for their financial support. But a transitional
constitution gives President Kiir wide powers.
The biggest challenge will be to build an economy that now depends by 98
percent on oil. Investors have been reluctant to commit money due to a lack
of infrastructure, corruption and rampant rebel and tribal violence.
Annual inflation hit 61.5 percent in September, up from 57.1 percent in
August.
Rebellions in southern oil areas with fighting at the border to Sudan could
create a humanitarian emergency in the region, soaking up aid meant for
development.
What to watch: -- Failed state syndrome. Some analysts believe the south
without its northern enemy will descend into chaos amid ethnic rivalries,
political meddling and cattle raiding. -- The South is building from scratch
a new nation with a small budget. Help from donors may be less forthcoming
following the global financial crisis. (Reporting by Ulf Laessing)
S. Sudan Unity State oil production down about 25 pct
Wed Nov 9, 2011 3:27am GMT
* Production down from about 115,000-120,000 bpd in July
* Unity State produces about a third of South Sudan's oil
* South Sudan became independent in July after referendum
* Oil official says rebels are not threatening production
By Hereward Holland
BENTIU, South Sudan, Nov 9 (Reuters) - Oil production in South Sudan's Unity
State has fallen about a quarter since July partly because the withdrawal of
Sudanese workers and technology made some wells temporarily inaccessible, an
oil official said.
Unity State oil minister William Garjang Gieng said 15 of 138 wells are out
of action in Unity and Mid oil fields, causing the state's output to drop to
around 80,000-95,000 barrels per day (bpd), down from around 115,000-120,000
bpd.
South Sudan produces about 75 percent of the formerly united Sudan's roughly
500,000 bpd, although these numbers can vary with conflict, weather and
other factors. Sudan's total production was around 450,000 bpd in June, the
oil minister at the time said.
Some of the wells could not be accessed during the rainy season because
Sudanese staff, materials and road-building equipment pulled out before
independence, he said. He expects production to bounce back to normal early
next year.
"There are some wells that have problems and they need to be reworked by the
service rigs, but they don't have access to the roads because that is a
swamp area," Garjang told reporters in Bentiu, the state capital, late on
Tuesday.
"The other problem that is facing people is the (amount) of manpower that is
working in the area."
South Sudan seceded from Sudan in July following a January referendum, the
culmination of a peace deal signed in 2005 that ended decades of civil war.
They have yet to agree on issues including how to manage the formerly
integrated oil industry.
At independence Khartoum pulled out 1,300 Sudanese oil workers, leaving just
300 foreign workers and 38 Southern Sudanese to run the Unity State oil
fields, Garjang said.
Some of the skeleton staff left working in the oil fields are volunteers who
have not been paid for five months, he said.
Unity oil field, the largest of three in the state, is run by Greater Nile
Petroleum Company, a consortium of national oil companies from China,
Malaysia, India and South Sudan.
ACCUSATIONS
Sudan and South Sudan accuse each other of supporting rebellions in their
shared border territories, including Unity state.
"Khartoum wants to cause any problem that will stop this field from working
and that will have a negative impact on the economy in South Sudan," Garjang
said.
South Sudan has accused Khartoum of training the insurgent South Sudan
Liberation Army (SSLA) and equipping them with landmines and guns, a charge
Khartoum denies.
The South accuses the SSLA of laying anti-personnel and anti-tank landmines
across Unity State and attacking Mayom town in late October. But Garjang
said the rebels did not threaten oil production.
"Those who are in the field are operating because they (the SSLA) are not
targeting the oil field, only the government vehicles. (The SSLA) don't want
to stop the operation in the field."
Garjang said he wants to install South Sudanese government employees in
Heglig, an oil town across the border in Sudan where oil from Unity's three
fields is pumped.
"We need to have people who are working there from the government of
Southern Sudan to know exactly the quantity of the oil being pumped to final
terminal because sometimes we may be cheated." (Editing by Alexander
Dziadosz)
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Received on Wed Nov 09 2011 - 19:01:24 EST