Hergé’s caricatured arms dealer in The Broken Ear (1937) offers oil-hungry powers an unfortunate blueprint for influence building in the two Sudans. Credit: thinmanSouth Sudanese President Salva Kiir this week addressed a letterto dozens of “former and current senior government officials” pleading with them to return an estimated US$4b in “missing” government funds. The Globe and Mail reports that the US$4b reportedly stolen would add up to approximately 2 years’ worth of oil revenues for the country, which upon seceding from Sudan took about 75% of Khartoum’s oil reserves with it (amounting to some $5b worth of annual income, according to the Petroleum Economist trade publication). Some US$60m has reportedly been recovered, but continued mismanagement, graft and badly bid contracts (most notably, for food imports) means that additional funds still remain unaccounted for and may be unrecoverable.[1]

Despite the emotional plea from Kiir, in an unencouraging sign for transparency in South Sudan this past April, the ruling Sudan People’s Liberation Movement (SPLM) Party that Kiir leads “voted against a bill seeking to make contracts and information about the young country’s oil industry more transparent by making it available to the public.”

From the Sudan Tribune:

The lawmakers’ decision has created some public criticism. As well voting against the Petroleum Bill, which would have required the government to provide justifications for oil contracts with individual companies, MPs also voted against publishing sales and production data.

During deliberations, George Bureng, an SPLM member of the National Assembly representing Central Equatoria State said he would prefer to see that oil related information be limited to only relevant institutions not the general public because information about oil could be used against the country by her enemies, referring to Khartoum.

“It is good to allow [the] public [to] access any information but sometimes there is sensitive information which cannot be made available to the general public”, Bureng told the house.

Tensions are high in both Khartoum and Juba as a result of a recent conflict over the disputed oil fields in Helig (which was occupied by South Sudan) and the border region of Abeyi (which was occupied by Sudan). Though the fighting has died down, talks on establishing a demilitarized zone have stalled, the AFP reports from Addis Ababa, where the African Union-brokered talks are taking place:

Peace talks to end weeks of fighting between Sudan and South Sudan were deadlocked Tuesday after failing to agree on where to set up a demilitarized zone along their contested border.

“The position of the parties is still rather far apart on these issues, ”South Sudan’s foreign minister Nhial Deng Nhial told reporters during a break in the week-long talks, which still continue despite the lack of progress.

“We have not yet been able to agree on the line from which the safe demilitarized border zone is going to be drawn,” Nhial said, but adding he remained optimistic a deal could yet be reached.

Further complicating these talks is the arrival of delegates from the Sudan People’s Liberation Movement – Army North (SPLM/A-N). This organization is the branch of the SPLA, whose leaders dominate South Sudanese government, still operating in Sudan (the SPLA was founded in 1983). Small Arms Survey notes that because “the political and military high command in the SPLM/A-N significantly overlaps,” “the political and military goals of the organization can be viewed as one since it is now an armed opposition movement in Sudan.”

As a result, though SPLM/A-N delegates were invited to the talks by the African Union, Khartoum has “excluded” them from the talks. Fighting in Sudan’s Nuba Mountains between the SPLM/A-N continues, and the continued iciness between Juba and Khartoum over the SPLM/A-N’s insurgency seems irresolvable. Khartoum’s armed forces are reportedly too worn down by years of attritional counterinsurgency operations in Darfur and the “Three Areas” provinces (including the Nuba Mountains) to launch a full-scale operation against South Sudan, but refuse to give up any more territory to the SPLM/A-N. Meanwhile, Juba simply does not wish to lose a force operating in the border provinces of the regime whose embrace it just escaped from. Plus, there is the question proposed by Philip Thon Aleu to a South Sudanese governor last summer that offers insight as to why Juba would be hard-pressed to accept any “compromise” initiated by Khartoum over the “Three Areas” region:

The SPLM was joined by people from South Kordofan, Blue Nile and people from other parts of the country who are not from South Sudan. How do you think about those people who are not part of south Sudan’s freedom today? And what is the way out?

Resistance to demobilization of secessionist militias and some SPLM units is already proving to be a challenge for South Sudan. And neither side is likely to make the first move towards a ceasefire with or recall of the SPLM/A-N – which has its own particular goals, of course – for fear of being perceived as “weak” in the eyes of the other.

No “great power” better understands (and plays off of) these clashes than the People’s Republic of China. Beijing is Khartoum’s primary arms dealer, but at the same time presents itself as a mediator to both countries and take’s the bulk of the two countries oil exports. Even though most of Sudan’s oil now lies in South Sudan, the extensive damage to facilities (and investor flight over the past several years) and continuing transit dispute between the two countries means that the Chinese have a long way to go in implementing a comprehensive plan for the country.

Though Beijing just reached an agreement to build up South Sudanese “infrastructure,” a pipeline agreement was conspicuously absent. South Sudan is landlocked, and has since 2005 depended on Sudanese facilities or trucks to deliver its crude to ports, paying Sudan transit fees. China does not wish to alienate Sudan, with which it has a much closer relationship, yet South Sudan has the most potential for growth – and as bad as Sudan’s economy is, South Sudan’s is much worse, and much more dependent on foreign aid with strings attached.

It’s about a lot more than the oil for Juba and Khartoum, but oil is the prism through which the two government’s “great power” backers will most likely see their conflict.

---

1. An unknown percentage of the lost money is thought to have been pocketed by officials to buy property overseas. Interestingly, last year, the Oakland Institute reported that American speculators were buying up South Sudanese properties.  ↩

From the NYRB blog, ‘A Turning Point in the Long Struggle’: Chinese Citizens Defend Liu Xiaobo by Perry Link:

Meanwhile, the Chinese authorities continue to try to control how the story is perceived both at home and abroad. Liu Xia, who is Liu Xiaobo’s wife, is under house arrest without having been charged, which violates Chinese law and is bad press internationally for the regime. Her telephone and computer have been confiscated, but she managed to get this message out on October 16 by Twitter on a cell phone:

One of the policemen watching me said that it was his wife’s birthday and that he wanted to go shopping for her. But his orders were that he had to stay with me, so would I like to accompany him to the shopping mall? Sure, I thought, and went. When we got to the mall, I noticed all kinds of strange people photographing me from various angles. I realized it had all been a trick. The authorities wanted photographs to prove that Liu Xia is free and happily shopping at malls.

This shows, beyond the regime’s bald mendacity, that it cares about international opinion.

Read the rest of the post for the open letter written by 109 friends of Liu Xiaobo — very courageous people all — calling for political reform in China. It's the same kind of demand that got him in jail.

Nobel Peace Prize Given to Jailed Chinese Dissident - NYTimes.com:

Given that he has no access to a telephone, it was unlikely that Mr. Liu would immediately learn of the news, his wife, Liu Xia, said. On Friday night, dozens of foreign reporters gathered outside the couple?s building in Beijing but they were prevented from entering by the police, who posted a sign saying the complex residents ?politely refused? to be interviewed. His wife was also barred from leaving her apartment.

 About time to stop worshipping China.

All illustrations on this post are actual Iranian postage stamps.On some level, the debate over sanctioning Iran appears to boil down to what China's position will be — another sign of what one might call the slow but steady multi-polarization of Middle Eastern geopolitics. 

From Ben Simpfendorder's New Silk Road blog:

China’s foreign policy is at an inflexion point. The country is emerging as a major power, but that will require tough choices.

The toughest choices are usually found in the Middle East. The region doesn’t like major powers sitting on the fence, and it’s only time before China will be forced to climb down.

It is Iran that will likely force a decision. China has so far maintained its policy of non-intervention─as one Beijing-based policy advisor said to me, “if we intervene in Iran, it would set a bad precedent for our relations with other countries”.

Fair enough. But so would a failure to intervene. It would suggest that China isn’t concerned about its other regional partners, especially Saudi Arabia. Let’s not forget. Iran might supply 13% of China’s oil supply, but Saudi Arabia supplies an even larger 20%.

So what are the chances that China agrees to sanctions?

So far, it appears unlikely, at least to judge from media headlines. Yet, a recent article in Huanqiu, a hardline Chinese-language foreign affairs magazine, points to an increasingly nuanced positioned, and thus hints at the possibility of change.

The author, Yin Gang, works at the Chinese Academy for Social Sciences. His views aren’t official policy, but they are indicative of official thinking. The type of language he uses he is also refreshingly frank. So, I thought to highlight some of the more useful points.

First, the carrot.

“China understands Iran’s desire for nuclear deterrent capability. China’s nuclear deterrent capability was difficult to achieve under Western pressure. But times have changed. China and Iran are both signatories to the non-proliferation agreement. We should respect these principles”.

And, then the stick.

“China cannot ignore global opinion. It very well understands that its Arab and Jewish friends don’t want to see the Iranian nuclear problem end tragically”. He later continues, “Under no conditions will China accede to Iran’s demands, only to hurt the Arab and other countries feelings”.

How to explain the change? It appears to be Iran’s intransigence in the past year.

The International Crisis Group, which recently released a report on China's Iran policy, has more:

China will work to water down any Security Council resolution through a delay-and-weaken strategy that maximizes concessions from both Iran and the West.

For months, the United States and other countries have spent an enormous amount of diplomatic capital pressuring China to impose a new round of sanctions on Iran.

But this effort has yielded few results and merely serves to strengthen China’s strategic hand. The longer China holds out, the better treatment it gets from the West, which is hoping for sanctions that will likely do little to resolve the nuclear impasse anyway.

There are several reasons for Beijing not to impose meaningful sanctions.

Iran is China’s third-largest oil supplier and home to expanding Chinese energy and commercial enterprises. China and Iran also share a strong resentment of perceived American meddling in their domestic politics. The bond with Tehran helps counterbalance American interests in a region that some strategists in China consider part of its “grand periphery.”

Beijing has also led a charm offensive with Muslim countries since the Xinjiang riots in July 2009, partly in response to strong condemnations by top Iranian clerics of China’s administration of the restive western province.

Unlike the US and Europe, Beijing does not seem to see an urgent need to deal with the Iran nuclear issue. Trying to pressure Beijing by sharing Western intelligence on Iran is unlikely to have much effect.

Building an effective international coalition of countries – including Arab Gulf countries and those with Security Council membership – is a far better way to shape China’s Iran calculus.

So the calculation is that China is not so concerned about Iran's nuclear program, but concerned enough about its relationship with the US (and the leverage it can extract from the Iran issue) to avoid backing Iran. The alternative is then to weaken sanctions. There's been some agitation lately that Saudi Arabia wants Iran to act tough on Iran. Last week I cited a piece by David Ignatius: 

Prince Saud al-Faisal, the Saudi foreign minister, traveled to China late last week to enlist its support against Iran. The Saudi message to Beijing, according to one U.S. official, is: "If you don't help us against Iran, you will see a less stable and dependable Middle East."

Sanctions do have the advantage for the Arab Gulf countries of increasing reliance on them for oil, as I wrote before. However, backing tough sanctions does not mean Saudi would back a strike on Iran, as some have intimated. Saudi expert Jean-Francois Seznec:

It seems that, in fact, the Saudis are more worried about potential U.S. military action against Iran than they are about the Iranians’ ability actually to obtain nuclear weapons.  The Saudis may not express this view clearly enough to change views on Capitol Hill, but the U.S. executive branch is probably quite aware of Saudi worries about the prospect of U.S. military intervention in Iran.

In a nutshell, and to paraphrase Talleyrand, U.S. military action in Iran would be more than a crime—it would be a mistake or, more precisely, a series of mistakes, which would quite rapidly lead to the United States losing its influence in the world.  The economic “blowback” from any U.S. military action against Iran would be enormous, causing great harm to the United States.  More generally, military strength is no longer the true basis of national power in the modern world.  In the aftermath of a U.S. military confrontation with Iran, the new economic powerhouses—China, India, and Saudi Arabia—would have a shared interest in constraining the United States so that it could not act again to cause such damage to their interests.  In acting to realize that shared interest, these states would effectively lock the United States out of both Asia and the Middle East.     

On the economic front, a U.S. attack on Iran would lead to a major increase in oil prices, whether the Straits of Hormuz get blocked or not.  If only Iranian exports were taken off line, prices could still reach $150 per barrel, as 3 million barrels per day would be removed from the market and insurance premiums would reach the levels seen during the “tanker war” of the early 1980s.  If the Straits were blocked for some time, prices could go above $200 per barrel, as 16 million barrels per day in exports from the Gulf as a whole would have to find new ways to get to international markets.  In this scenario, Saudi Arabia could export up to 5 million barrels per day through the Red Sea, which would still leave the markets short of 11 million barrels.  Within 18 months, it might be possible to lay new pipelines to the Gulf of Oman that would bypass the Straits of Hormuz (mainly for oil exports from the United Arab Emirates), and Iraq could repair its strategic North-South pipeline to export oil via the Mediterranean.  However, even with these extraordinary measures, international markets would still be short of about 6 million barrels per day, and the impact on Asian economies that rely very heavily on Gulf crudes would be extreme.

Although, as I will discuss in greater detail below, Saudi Arabia would see a dramatic increase in its oil export revenues in such a scenario, the Saudis are nonetheless opposed to U.S. military action against Iran because, in their view, it could unleash complete havoc in the region. 

Why do I mention Saudi Arabia's (and I think most or all of the Arab world's) opposition to a strike on Iran in context of the sanctions? These are after all two quite different things. The reason there is a link is that it's hard to see tough sanctions going through without China's backing, which does not appear forthcoming. And soft sanctions are unlikely to have much of an impact on the Iranian regime — and perhaps tough population-centric sanctions wouldn't either.

Despite the view in neocon circles that sanctions would somehow bring more Iranians to support for the Green Movement, internal regime change in Iran still seems pretty improbable, especially in the context of a confrontation with the West. I suspect the neocons know this, but need sanctions to be implemented and then fail to be able to make the argument for a US-backed strike. And if it does come to a strike, probably by Israel, then the question becomes whether a direct attack on a sovereign state is a greater violation of international law then Iran's violations of the NPT, especially in the context of Israel's own nuclear program.  

* Middle East Online | The End of Brotherly Love? | Tarek Kahlaoui on the Egyptian MB.
* The Israel Lobby and the Prospects for Middle East Peace « P U L S E | Lectures by Stephen Walt.
* Israeli Organ Trafficking and Theft: From Moldova to Palestine | Investigation by Washigton Report.
* Doctor admits Israeli pathologists harvested organs without consent | World news | The Guardian | Unbelievable.
* Israel gives response to Hamas prisoner swap offer | "Israel relayed its response to the proposed swap and handed over a list of Palestinians it wants exile."
* Jimmy Carter to U.S. Jews: Forgive me for stigmatizing Israel - Haaretz - Israel News | WTF?
* The Fascination of Israel – Forward.com | Review of three books on Israel.
* «Il y a 40.000 Chinois en Algérie» | 40,000 Chinese in Algeria, 2000 Algerians in China.
* Meedan | Moroccan and Jordanian forces join Saudi offensive against Houthis. | Handle with care, chief source appears to be Spanish press.
* In Shift, Oren Calls J Street ‘A Unique Problem’ – Forward.com | Israel ambassador ramps up the attack on new lobby.
* IRIN Middle East | EGYPT-ISRAEL: Perilous journey to the promised land | Middle East | Egypt Israel | Migration Refugees/IDPs | Feature | On sub-Saharan migration to Israel via Egypt.
* Palestinians shoot at Egypt | Response to the collapsing of tunnels that have claimed many Palestinian lives?
* Egypt's ailing cotton industry needs shake-up | Reuters | Industry risks a "slow death."
* Middle East Report Online: Broken Taboos in Post-Election Iran by Ziba Mir-Hosseini | On the Green Movement and gender issues.
* Egypt rebukes Hamas over 'foot-dragging' in Palestinian reconciliation - Israel News, Ynetnews | Omar Suleiman:

Suleiman said Egypt had promised Hamas it would address the terror group's reservations vis-à-vis the reconciliation deal "after they sign and begin to implement it." He said Hamas' concerns "lacked substance," adding that the agreement would not be revised. "If it will (be changed), I'll resign," said Suleiman.