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Gold Price Trend Forecast Summer 2019

International Community Presses Juba, Khartoum On Sudan Referendum

Politics / GeoPolitics Jul 30, 2010 - 12:22 PM GMT

By: OilPrice_Com

Politics Best Financial Markets Analysis ArticleThe international community is pressuring the Juba and Khartoum governments to speed up preparation for a vote on South Sudan’s future – a decision that will be dominated by the fate of coveted oil resources -- but an expert on the African country criticizes the lack of understanding about Sudan.

The referendum, scheduled for January 2011, is widely expected to result in the south parting ways with the north after years of bitterness and war.


Oil is located mainly in the south, but the north is also on the hunt for the precious commodity because a deal to divide the oil wealth will run out in six months. Many predict that arguing about the future of the resource will put the two sides on the brink of war once again.

“Sudan is alarmingly unprepared for that referendum,” said Rosie Sharpe, a campaigner for Global Witness, a London-based non-governmental organization focusing on conflict and resources.

But Benaiah Yongo-Bure, an associate professor of social science at Kettering University in Flint, Mich., dismissed the accusations by foreign NGOs that the Khartoum government and South Sudan are not ready for post-referendum life.

“They go and say things without a deeper understanding of Sudan,” charged
Yongo-Bure, a Sudan expatriate. “They talk too much without knowing the reality of Sudan, and they’re confusing things. I know [the two governments] are not ready, but the referendum will have to go on and they’ll get ready in the process.”

A global coalition of 26 humanitarian and human rights organizations like Refugees International and the African Centre for Justice and Peace Studies issued a report in mid-July warning that the Comprehensive Peace Agreement (CPA), which ended 20-plus years of war and has held both sides at bay for five years, will expire in six months while many political issues like oil sharing and border demarcation have not been resolved.

“Neither Sudanese actors, nor the so-called international Guarantors who have formally pledged to support them to implement the CPA, are well prepared,” states the report, titled “Renewing the Pledge.” CPA guarantors include the African Union, the United States, Italy and the United Kingdom, among others.

Author Dave Eggers and John Prendergast, co-founder of the Enough Project, also weighed in: If no referendum takes place in January, or if the results are manipulated, then fighting will break out worse than before.

And earlier this month, Global Witness -- which cautioned that a wealth sharing agreement is coming to an end just as the south is predicted to vote to secede -- issued five principles for a post-referendum oil deal in Sudan such as full public disclosure.

“The precariousness of the situation cannot be overstated,” Global Witness’ briefing paper notes.

Global Witness’ report is based, in part, on its investigations into the country's current oil wealth sharing deal and experience in working on oil and transparency issues in Angola, Equatorial Guinea, the Republic of Congo, Cambodia and East Timor, according to a press release accompanying the report’s release.

Still, the dire warnings of many human rights organizations bother Yongo-Bure.

Even with 10 years to prepare, the southern government of Juba and the northern government of Khartoum would still be racing to tie up all loose ends, Yongo-Bure told OilPrice.com. “The north does not want the south to go,” he said. “They also don’t want to change their issues of Islamic law, the issue of sharing in the power. They want to dominate Sudan.”

Given this internal turmoil, the “international community is not helping,” he declared, noting that foreign groups are pressing the weaker south to “submit” to the north because it is in Juba’s best interests. He said he doubts an agreement can be forged unless the south gives in to the requests of its northern neighbor for the continued flow of oil money.

While international groups “don’t say” categorically that the south should give in to the north, Yongo-Bure said this is how he interprets the NGO message.

Yet if the referendum spurs the official breakup of Sudan, the professor does not see the benefit of sharing resources. “There’s no obligation,” he noted.

Despite NGO criticisms of the slow pace of negotiations, there is no shortage of attention on Sudan these days.

Several standing committees in Sudan are tackling post-referendum issues, said Parek Maduot, a member of the Sudan People’s Liberation Movement (the southern Sudanese political party) and an independent commentator on Sudan affairs based in Virginia. Former South African President Thabo Mbeki also heads an African Union contact group, he said. Over the next three or four months, extensive meetings will be held between Juba and Khartoum, and even abroad, to resolve lingering issues between both sides, Maduot said.

This week, Mbeki convened a two-day session that begins the process of negotiating post-referendum arrangements, according to a New Sudan Vision report. The report states that global experts gave presentations on the likely consequences of negotiating oil, citizenship, borders and other issues.

The eventual system adopted to share oil if the south becomes independent must come with a mechanism to verify that wealth is being shared, Global Witness’ Sharpe told OilPrice.com. One would need to know the volume of oil produced, the price of every individual sale of oil and the cost claimed back by oil companies, she noted.

“And it’s practically impossible to verify all of those things, which means that there continues to be mistrust over whether the oil revenues are being shared fairly,” Sharpe maintained. “Practically every southerner you’d speak to thinks that they’ve been cheated over the oil revenues.”

A number of options have been suggested on how to resolve the oil question, including that the northern capital Khartoum should charge its southern counterpart Juba a fee for using a pipeline to move the resource, she said. This kind of a system would be “more easily verifiable than a percentage split in the oil revenues,” she added.

According to this proposal, the south would know “how much oil has been loaded into the pipeline, [and] will need to trust what comes out the other end,” Sharpe said. “And the north will know what comes out of Port Sudan but needs to know that all the oil has gone into the pipeline in the first place.”

This creates a situation where “both parties need to trust each other, which gives them both an interest in coming up with a transparent arrangement,” she said.

Under this option, southern Sudan would not simply pay for the physical use of the pipeline shipping crude through the north, but also technical expertise from Chinese and Malaysian oil firms, added Maduot, the independent Sudan commentator.

Kettering University’s Yongo-Bure backs the idea of renting pipelines from the north, which would go up to Port Sudan, a city located on the Red Sea. The agreement would have to be renewed every “two or so years,” but should not tie the south in for too long, he advised.

The rationale is that if the north overcharges the south, the latter can pursue alternative options, Yongo-Bure explained. While the Kenyan government has offered Juba access to a port north of the city of Mombasa, and Toyota is willing to construct a pipeline, the pipeline will take time to put in place, he said.

Building a pipeline to a different country would require paying that government for the use of the infrastructure, Maduot told OilPrice.com. With immediate financing, there are many companies that have the expertise and can build it within three years but the cost ranges from $2 billion to $4 billion, he added.

“It’s doable if there’s a political will,” said Maduot, “but it’s not a decision you can make in a vacuum.” Khartoum would undoubtedly be opposed to a plan that cuts its oil revenues within two or three years and hits its bottom line, he explained. The idea would also lead to renewed insecurity and fighting, he cautioned.

Critically dependent on oil, both north and south will eventually come to an agreement, he predicted, but not without “hiccups along the way.”

Source: http://oilprice.com/..

By Fawzia Sheikh for Oilprice.com who focus on Fossil Fuels, Alternative Energy, Metals, Crude Oil Prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

© 2010 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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