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.

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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.  ↩

While we've been fascinated with Egypt's bizarre presidential elections drama and other stories, I and many others have been oblivious to the serious worsening of the situation between the two Sudans. There are very few foreign reporters there — basically only the news agencies at most times — but considering the seriousness of the situation, the potential for many deaths, and the potential impact in East Africa and the Sahel this is worthy of attention. It's also surprising the issue is not getting more scrutiny at the UN.

Here's a quick rundown from published sources.

Omar al-Bashir is threatening to escale recent skirmishes with South Sudan into a full-scale war:

Sudan President Omar al-Bashir has said his main goal is now to "liberate" the people of South Sudan from its rulers following recent border clashes.

The former rebel Sudan People's Liberation Movement has ruled South Sudan since it seceded from Sudan in July 2011.

President Bashir was addressing a rally at his party's headquarters.
Fighting between the two countries has now spread to another area, further adding to fears of all-out war.

This follows an earlier statement by the North's parliament calling the south an "enemy":

(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 neighbor 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.

This McClatchy report minces no words:

HEGLIG, Disputed Sudan — Nine months after Sudan split into two nations in search of a peace brokered by the United States, it is now clear that the two sides are at war.

Diplomats discussing the armed conflict talk of skirmishes and dustups, but a visit to this border region shows that what is taking place here is no accidental exchange of fire by troops confused about where the border lies. Instead, what’s happening is a headlong mobilization involving not just thousands of Sudan’s and South Sudan’s best forces and heaviest equipment, but heavily armed rebels from the distant Darfur region fighting alongside the South Sudanese troops.

Whether an emergency peace plan could curb the escalation remains to be seen. But neither side is talking to the other, and the mood here is weighted with the sober intensity of wartime.

On Sunday evening in a looted Sudanese garrison in Heglig, South Sudanese generals drew military positions in the sand with a curtain rod. They were expecting an imminent counteroffensive by Sudanese troops. Soldiers stood by, twitching, on edge.

Suddenly, missiles rained in, and artillery pounded the earth behind.

"We are under attack," yelled South Sudan’s Maj. Gen. Mangar Buong, the commander. Troops scurried, trucks spun out.

The international community has condemned the fighting and has called on South Sudan to withdraw. But its leader, Salva Kiir, has publicly refused to do so.

Also AP, which has this graphic report from Heglig, where the fighting started two weeks ago:

The road to Heglig, an oil town that South Sudan and Sudan are fighting over, is lined with discarded furniture, destroyed buses and tanks, and clusters of dead Sudanese soldiers.

South Sudan's army, known as the SPLA, moved north into Heglig earlier this month, sparking the bloodiest fighting since South Sudan broke off from Sudan last July and became the world's newest nation. A top SPLA official said the south plans to keep moving north, taking territory the south believes it owns. The crisis threatens to widen into all-out war.

An Associated Press reporter was among the first foreign journalists to reach the disputed border since fighting began two weeks ago.

As 2nd Lt. Abram Manjil Kony sped north from the South Sudan military base at the Unity State oil field, he pointed out clusters of fallen Sudanese soldiers. Birds stalked the corpses.

"Jalaba, jalaba," Kony said, meaning "Arab" and, by extension, people from Sudan, which is predominantly Arab while the south is predominantly black.

This is just as South Sudan became the IMF's newest member — just as the North's economic forecast was revised by IMF to a decrease of 3.9% in GDP in  2012. The Sudanese pound, the north's currency, is at a historic low while in the South's capital, Juba, fuel is running out. This Reuters report by Alexander Dziadosz, who has been doing great work (see this report from a town where a dam is being dual-purposed for defense), says the economic prospects of both North and South are crucial to understanding the situation between the two:

(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".

Update: Do check out this excellent piece in The Economist too.

The post below, on the worsening relations between the two Sudans and the Northern regime's domestic worries, was contributed by Abdullah Ahmed. I had missed these alarming developments, which before the Arab uprisings would have been major news. 

While much attention is currently being focused on Egypt, there is much to learn from the current oil dispute between Sudan and its former territory, South Sudan. South Sudan’s oil shutoff reveals that it is not willing to bargain for permission to export oil.

With the other issues yet to be settled between the two governments, including final demarcation of the border, the SPLM-led South Sudanese government is taking the situation very seriously. The National Congress Party’s “take no prisoners” attitude in dealing with South Sudan’s government is strongly reflected in Omar al-Bashir’s actions and words. For example, the undersecretary of Sudan’s foreign ministry gave an interview just over a month ago in which he referred to the South Sudanese as “brothers” and the border issue between the two countries as a minor issue. Yet, Sudan’s actions have been much louder than the words of her paid employees, as the recent bombing of the Jau area on the border illustrates.

It is quite evident that Sudan’s government policies aren’t exactly encouraging. Bashir has taken the textbook Arab government approach to civil strife: distract and deny. Bashir knows he is in a difficult place, and losing 75% of Sudan’s oil reserves during South Sudan’s independence has definitely been on his mind. He’s followed in the footsteps of countless others; just as Qadhafi and Mubarak gave defiant speeches hoping to instill fear in their opponents before they were forced from office, Bashir has threatened war against South Sudan in a move that illustrates just how desperate things are at NCP headquarters. Bashir himself must understand that this is an empty threat; morale in his army hasn’t been this low since he came to power, and counting his allies will prove to be a sad effort (the article is from 2006, but one of few published writings on Sudan’s army).

From within, Sudan’s struggle to pay its employees on time is no secret. Even before South Sudan’s independence, a doctor’s strike over the government’s failure to pay their salaries resulted in empty promises of pay raises and better working conditions. Recent protests at Khartoum University went largely unnoticed by the international community, but it is important to note that December’s protest was the largest case of unrest in Khartoum since the 2007 attack by Darfurian rebels. Thus, the Sudanese people are watching Egypt’s events closely, and they are more interested in Egyptian events than the lack of media attention would suggest.