ANALYSIS-Buckling economies key in Sudan's "war of attrition"
Mon Apr 16, 2012 12:26pm GMT
* Both economies face high inflation, risk implosion
* Disputed Heglig oil field produced half Sudan's output
* South may be counting on possible uprising in north
By Alexander Dziadosz and Ulf Laessing
April 16 (Reuters) - The outcome of the dramatically escalating border
fighting between Sudan and South Sudan is more likely to be determined by
which of the two faltering economies collapses first than by relative
military prowess.
South Sudan, which seceded from Sudan in July, seized the disputed Heglig
oilfield on Tuesday, edging the two former civil war foes closer to
full-blown conflict than any time since the South gained independence.
But rather than sparking an all-out military confrontation, each side's aim
may now be to target one another's oil facilities and wait for their
opponent to crumble under armed insurgencies, popular unrest and fuel
shortages.
"It is a question of which side can maintain the basic governance and
military structures longer," a Sudan expert with government contacts said,
speaking on condition of anonymity.
The two countries have already driven their economies to the brink of
implosion since the South split away, cleaving the vital oil industry in
two.
Squabbling over oil payments and border fighting has withered combined crude
output - previously the main source of foreign currency and state revenues
for both countries - from around 500,000 barrels a day before partition to
just over a tenth of that.
Food prices are soaring on both sides of the border and currencies reeling
as officials scramble to make up for the sudden loss of revenues in
countries already reeling from years of war, mismanagement and U.S. trade
sanctions.
But despite their weaknesses, both sides have consistently reckoned they
have the upper hand on their foe, partly explaining why fighting has
escalated despite the obvious fact that neither side can actually afford to
fight a war.
"Khartoum is fighting for its survival," said Peter Bashir Gbandi, a deputy
for the ruling Sudan People's Liberation Movement (SPLM) in the South's
national assembly, during an emotional Juba panel debate packed with
bellicose comments and broadcast live on radio.
"Khartoum is economically khallas , collapsing," he said, using the Arabic
word for "finished".
"I AM NOT UNDER YOUR COMMAND"
With popular uprisings convulsing the Middle East, many in the South have
predicted Sudan's President Omar Hassan al-Bashir, in power since a 1989
coup, will soon meet the same fate as leaders in neighbouring Egypt and
Libya.
If the South can hold out a few months longer, the reasoning goes, Sudan's
people will surely overthrow their government and replace it with a regime
more receptive to Juba's demands.
Khartoum, on the other hand, sees a good chance the South - already hit by
domestic rebellions, horribly violent cattle raiding and widespread poverty
- will soon run out of money and descend into ungovernable chaos.
The result is what Harry Verhoeven, a University of Oxford researcher who
has studied Sudan extensively, calls a "war of attrition" in which both
sides wait for the other to crumble internally or run out of the funds and
fuel needed to wage war.
With its MiG and Antonov planes, Sudan still has a huge advantage in terms
of air power, which even South Sudan's military spokesman admits the South's
forces can do little but "take precautions" against.
But even before Heglig fell, Sudan was fighting insurgencies on three fronts
- the western Darfur region and the South Kordofan and Blue Nile border
states - and the South may be betting Khartoum cannot afford to stretch the
military further.
"As we speak now there are demonstrations in Khartoum. You cannot fight, you
cannot open another front in southern Sudan if you already have four fronts
to fight," SPLM deputy Gbandi said.
That may explain why South Sudan's rulers have been unrepentant about the
occupation of Heglig, even under pressure from the United States and other
global powers.
In a speech to parliament interrupted by clapping and cheering last week,
South Sudan's President Salva Kiir chided U.N. chief Ban Ki-moon for asking
him to withdraw his troops.
"I told him you don't need to order me because I am not under your command.
I am a head of a state," he said.
FUEL PRICES
Juba's defiance is likely a sign it believes it can catalyse regime change
in Sudan, Verhoeven said. "If Khartoum falls, of course, the SPLM thinks
we're looking at a very different game and everyone will forget their
gamble."
And yet many in Khartoum's ruling National Congress Party (NCP) will likely
take a similar view of the South, despite the shock of losing Heglig.
Officials often contrast Sudan's relatively diverse economy with that of
South Sudan, which depended on oil for 98 percent of state income.
"If there will be war after the loss of oil it will be a war of attrition.
But it will be a war of attrition hitting them before us," Sudan's Bashir
told state television a few days after the South's oil shutdown.
Sabir Hassan, a former central bank governor who co-chairs Khartoum's
economic negotiations team, insists the country is still better off than its
southern neighbour despite the chance it will have to import more fuel now.
"In the south there is no economy as such. It is a salary-based economy," he
said. "Experience has shown that our economy has some resilience when it
comes to facing such crises. We have had crises which were very similar to
this before."
Some foreign experts and advisers estimate South Sudan may struggle to pay
for imports and support its currency within a couple months without outside
help, an assessment officials in Khartoum are certainly aware of.
"MISERABLE SITUATION"
The loss of Heglig knocked out about half of Sudan's 115,000 barrel-a-day
oil output. Landlocked South Sudan shut down its own roughly 350,000 barrels
per day in January in a row over how much it should pay to export crude via
Sudan.
And while friendly governments could offer some financial support to avert
economic disaster in either country, both may struggle to secure enough
loans to see them through the crisis, especially while the threat of war
looms.
One flashpoint for both countries is fuel prices - a red line for unrest in
many poor countries this year, such as Nigeria.
Both Sudan and South Sudan have seen long queues as motorists tried to stock
up on petrol in the past week. Four filling stations in Juba visited by
Reuters had run out of fuel on Sunday.
In Khartoum, rumours have spread the government may have to cut fuel
subsidies after losing Heglig despite official assurances the state has
enough reserves to handle the crisis.
Food prices are another worry. The loss of foreign currency from oil
revenues has driven up the cost of imports, especially in South Sudan, where
staples like rice and tomatoes are trucked in at a premium from Kenya and
Uganda.
Any halt or delay in state salaries could also make it harder for either
side to keep its government functioning.
In Bor, capital of South Sudan's Jonglei state, a government worker this
month said his ministry's budget for cleaning, water and other services had
already been halved under government austerity measures.
"It's not a problem, of course. When it touches salaries, this is where the
problem comes in," he said.
There are similar risks in the north. One Sudanese economic expert with
political ties estimates three quarters of the budget goes to Sudan's
military, security forces and high-level officials. If true, that does not
leave much room to trim spending without hitting sensitive areas.
"The government is unable to get us out of this miserable situation," the
expert said. But he said a bloody political transition could lead to a
"Somalia situation", and fear of chaos like that affecting the Horn of
Africa failed state could deter many Sudanese from rising up. (Additional
reporting by Khalid Abdelaziz; Writing by Alexander Dziadosz; Editing by
Peter Graff)
* Khartoum parliament urges quick recapture of oilfield
* Border clashes raise spectre of relapse into war
* South Sudan says province hit by air strikes (Adds South's comment on
casualties from air strikes)
By Khalid Abdelaziz and Ulf Laessing
KHARTOUM/JUBA, April 16 (Reuters) - Sudan's parliament branded South Sudan
an "enemy" on Monday and called for a swift recapture of a disputed
oil-producing region as rising border tensions pushed the old civil war foes
closer to another full-blown conflict.
South Sudan, which seceded from Sudan last July, seized the contested Heglig
oilfield last Tuesday, prompting its northern neighbour to vow to recapture
the area by "all means".
The oilfield is vital to Sudan's economy, producing about half of the
115,000 barrel-per-day output that remained in its control after South
Sudan's secession.
Addressing the Khartoum parliament, speaker Ahmed Ibrahim al-Tahir accused
the South's ruling party - the Sudan People's Liberation Movement (SPLM) -
of posing a security threat to the north.
"We declare that we will confront the SPLM until we end its rule of the
South, and will work to gather our resources to realise this aim," he said.
"We are in a battle that does not finish with the recovery of Heglig, but
with an end to the danger that comes from South Sudan."
The assembly went on to adopt a resolution describing the SPLM government as
"an enemy", but it did not spell out the full implications of the decision.
South Sudanese Information Minister Barnaba Marial Benjamin called the
decision "ludicrous."
"How can they call us an enemy?" he said.
South Sudan insists Heglig is rightfully part of the South and says it will
not withdraw its troops unless the United Nations deploys a neutral force to
monitor a ceasefire.
It accused Khartoum on Sunday of reducing the oil facility "to rubble" in an
air strike, an accusation denied by Sudan.
"If any damage has occurred in Heglig it may have been on the part of the
army of South Sudan," Sudanese Information Minister Abdallah Ali Masar said.
Both sides regularly make conflicting claims; limited access to the remote
region makes it difficult to independently verify their statements.
FIGHTING ECLIPSES NEGOTIATIONS
The clashes have all but killed hopes the two can reach an agreement soon on
disputed issues such as demarcation of their 1,800-km (1,200-mile) border,
division of national debt and the status of citizens in each other's
territory.
South Sudan's military spokesman, Philip Aguer, said the its armed forces
had brought 14 prisoners of war to Juba on Sunday, the first to arrive in
the South's capital since the fighting in Heglig began.
He said Sudan's army had also shelled a location in the west of South
Sudan's Upper Nile state on Sunday. "The army is trying to open other
fronts," he said.
Barnaba said at least four people were killed and 21 wounded by air strikes
on Sunday on Bentiu and Mayom in South Sudan's Unity state, figures that
could not be independently confirmed.
Sudan's military spokesman and foreign ministry spokesman were not
immediately available for comment.
Kouider Zerrouk, a United Nations spokesman, said a U.N. camp in Mayom had
been hit during an aerial bombardment of the area on Sunday. Zerrouk said no
one was wounded at the camp, known as a "county support base," but a radio
room was damaged.
U.S. Ambassador to the United Nations Susan Rice described the bombing as
"particularly condemnable and deplorable".
"This is obviously a subject of grave concern as is the South's continued
presence in Heglig and a myriad of violent confrontations in and around the
border area and deep into both countries territory," she told reporters on
Monday.
In Juba, South Sudan's parliament decided to raise military spending and
bolster the army by cutting salaries of all deputies by 10 percent for three
months.
"It is better to give the money to the army to defend our country," senior
parliamentarian Joy Kwaje told reporters after deputies approved a
resolution to support the armed forces and a general mobilisation of the
military. (Writing by Alexander Dziadosz; Additional reporting by Michelle
Nichols and Alexander Dziadosz Editing by Mark Heinrich)
C Thomson Reuters 2012 All rights reserved
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Received on Mon Apr 16 2012 - 16:06:01 EDT
