From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Mon Jul 12 2010 - 10:06:28 EDT
<http://allafrica.com/sudan/> Sudan: Without a Transparent Deal On Sharing
Oil Wealth, War is Inevitable
Rosie Sharpe
12 July 2010
_____
analysis
Nairobi - The Comprehensive Peace Agreement that brought an end to the
North-South conflict in Sudan - Africa's longest-running civil war -
contains an innovative oil wealth sharing agreement that changed oil from a
commodity fuelling the war into a commodity that has helped secure the
peace.
The $8 billion that have flowed from Khartoum to Juba since the agreement
was signed in 2005 have played a large part in keeping the peace agreement
intact. However, the wealth sharing deal comes to an end in January 2011, at
the same time that a referendum is to be held on Southern independence,
which is likely to see a landslide vote by the South in favour of secession.
The precariousness of the situation cannot be overstated. Oil matters to the
North: Oil revenues accounted for 50 per cent of domestic revenue and 93 per
cent of exports in 2009. It matters to the South as well: Oil revenues
accounted for 98 per cent of the Southern government's income in 2009.
Yet the majority of the oil wells are located in the South, which could be
an independent country from 2011. Consequently, both sides appear to be
preparing for the worst, with armies from the North and South stationed on
the border. Last time there was large-scale conflict between North and South
Sudan, the war lasted 22 years, 1.5 million people were killed and four out
of five people in the South had to flee their homes at some point.
Negotiations between the National Congress Party, the ruling party in
Khartoum, and the Sudan People's Liberation Movement, the ruling party in
Juba, on what the country or countries will look like after the referendum
were scheduled to start on July 5 but were delayed until July 10.
There are numerous important topics to be discussed at the negotiations,
including the status and rights of the several million Southerners living in
the North if the South secedes, and what happens to the armies. But the key
issue is oil.
The US Special Envoy to Sudan has stated that without a new oil deal and an
agreement on the North-South boundary, the odds of a return to violence are
very high. A new oil deal will require decisions on a range of issues.
Among them, the long-delayed demarcation of the North-South border; what
happens to oil companies operating in the South if the South becomes
independent; what happens to oil blocks that straddle the North-South
border; and what happens to the stakes that Sudanese and South Sudanese
state-owned oil companies have in various oil blocks.
The most important factor that a new oil deal will have to address is how
the oil revenues can be equitably split between North and South in
post-referendum Sudan.
If the South becomes an independent country, it will be landlocked and have
to depend on pipelines running through the North in order to export its oil.
Although there have been proposals to build a pipeline from Southern Sudan
to the Kenyan coast, it would not be possible to do this by 2011, and the
Southern government cannot afford to halt oil exports while waiting for the
pipeline to be built.
It is also questionable whether there is enough oil in Southern Sudan to
make building such a pipeline economically viable.
In other words, if the oil, and therefore the oil revenues, are to keep
flowing, North and South will have to co-operate.
Global Witness has over 15 years of experience campaigning to break the
links between natural resources, conflict and corruption.
We have set out five principles to which any new oil deal in Sudan should
adhere in order to ensure that it is robust enough to stand up to the
challenges that will no doubt come its way.
The recommendations derive from our investigation into Sudan's current oil
wealth-sharing agreement; from our experience in working on oil and
transparency issues in other countries including Angola, Equatorial Guinea,
the Republic of Congo, Cambodia and East Timor; from our experience in
setting up the Publish What You Pay coalition of NGOs; and from our role in
shaping the Extractive Industries Transparency Initiative.
The five principles are:
* Openness and full public disclosure should be built into the deal
* Compliance with the new oil deal should be easily verifiable
* Implementation of the new oil deal should be independently monitored
* There should be a dispute resolution mechanism built into the deal
* The new oil deal should start with a clean slate - the current
wealth sharing agreement should be audited.
* The importance of getting the details of any new oil deal right
cannot be overstated.
In October 2007, suspicions over whether oil revenues were being shared
fairly caused the Comprehensive Peace Agreement to come close to falling
apart when the SPLM temporarily pulled out of the power-sharing government.
There is such a lot of money at stake, and such a lot of mistrust between
the two parties, that any new oil deal has to have checks and balances in it
in order to ensure that it stands the test of time.
If the deal goes wrong - no matter what the outcome of the referendum - it
is difficult to see it ending in anything but military battles for control
of the oilfields.
----[This List to be used for Eritrea Related News Only]----