Oil fuels the conflict between Sudan and South Sudan – and it keeps getting hotter

Khartoum has resumed its bombardment of South Sudan despite the passing of a UN Security Council Resolution calling for a ceasefire. With military action escalating over the past few days, the two nations…

Sudanese President Omar al-Bashir addresses troops and supporters during a public appearance in April 2012. EPA/str

Khartoum has resumed its bombardment of South Sudan despite the passing of a UN Security Council Resolution calling for a ceasefire.

With military action escalating over the past few days, the two nations are now on the brink of all-out war. The rhetoric of both nations' leaders is becoming increasingly strident.

While the immediate causes of this conflict are control of oilfields and territorial disputes, the tension is rooted in a deeper clash of culture, religion and politics.

A history of oil, division and conflict

In 1978, Chevron discovered oil in the Bentu and Heglig districts of southern Sudan, and America resumed foreign aid to Sudan. At this stage, the Sudan was the world’s sixth largest recipient of U.S. military aid.

The central government in Khartoum was determined to control the oil fields from the outset, and moved to create the “Unity Province” in 1980. This creation excluded the oil regions from southern control and incorporated them into the north.

The takeover of the oil districts and the introduction of sharia law in 1983 reignited rebellion in the south. Colonel John Garang formed the Sudan Peoples’ Liberation Army (SPLA), attacking Chevron oil installations. By 1993 the war against the south had become a jihad, with the current ruler Brigadier Omar al-Bashir staging a successful coup with the support of the National Islamic Front under Hassan al-Turabi.

A preliminary peace accord with the SPLA was signed by the al-Bashir government in 1997. The final peace accord in 2005 granted autonomy to the southern region and a 50/50 share of the oil revenue with the central government in Khartoum. John Garang of the SPLA then became Vice President of Sudan and an agreement was made to hold a referendum within ten years on independence for Southern Sudan.

This “Peace for Oil” deal led to a falling out between al-Bashir and the National Islamic Front, but oil revenue was essential to maintain the patronage politics that kept al-Bashir in power. In turn, el-Turabi and the National Islamic Front allied itself with Khalil Ibrahim, leader of the Justice and Equity Movement (JEM) rebels in Darfur.

The conflict in Darfur took on a new dimension with the 2005 Peace Accord with the south, as Darfur was left out of the oil revenue carve-up. The Sudan Liberation Army (SLA), a regional group representing Fur peasant interests, felt left-out of the advantage received by their former SPLA allies in the south. They demanded greater autonomy for Darfur and a share of the oil revenue.

Foreign interests

In 1999, China National Petroleum Corporation constructed a 1,600 km pipeline from the southern oil fields to Port Sudan on the Red Sea. At this time, Sudan provided less than 1% of China’s oil imports. By 2009, Chinese investments in Sudan amounted to more than $8 billion. Sudan became the fifth largest supplier of oil to China in 2012, exporting 67% of its oil to the rising nation.

But most of the oil in the region is in South Sudan, and al-Bashir’s government in Khartoum was increasingly dependant upon oil revenue to survive. In January 2012, faced with falling revenue, al-Bashir raised the transit charges for oil in the pipeline to Port Sudan to $38 per barrel. The international rate would be between $0.40 and $1 per barrel.

The government of South Sudan countered this by shutting down oil production on January 22, and made a one-off $2.6 billion grant to Khartoum plus a transit fee of $0.63 to $0.69 per barrel.

A year after achieving independence through a U.N. monitored referendum on 9 July 2011, South Sudan is now constructing a second pipeline across Kenya to the Indian Ocean port of Lamu. This pipeline will have the long-term effect of ending dependence on the Chinese pipeline and lessening Khartoum’s control over Southern oil.

The fight for control

The government in Khartoum has launched military attacks in the disputed border district of Abyei where much of Khartoum’s remaining oil fields are located. Southern Kordofan was suppose to hold a separate referendum to decide whether it stayed in Sudan or joined South Sudan. However, the referendum has been repeatedly postponed by al-Bashir over the issue of who can vote.

A fire at an oil factory in the area of Heglig in Sudan. EPA/str

The fighting threatens to spill over into Blue Nile Province, with the South Sudan government helping to arm the rebel Sudanese Peoples’ Liberation Movement-North (SPLM-N) in the South Kordofan and Blue Nile Provinces. The Sudanese Armed Forces have carried out bombing raids against towns and refugee camps in South Sudan, with the SPLA capturing the Heglig oil fiends in Sudan in retaliation, cutting about half of Sudan’s remaining oil output.

Khartoum is now faced with regional conflicts in Darfur, Southern Kordofan and West Nile Provinces, as well as simmering unrest in the Beja region along the Red Sea, where locals feel they have reaped few benefits from the oil flowing through their region to Post Sudan.

Unless there is forceful diplomatic intervention by the United Nations, African Union, the Arab League and closer regional cooperation between China and the United States, matters could easily escalate into full-scale war between the Sudanese Armed Forces and the SPLA.

Prospects of peace

There are numerous post-independence issues that need to be resolved between Sudan and South Sudan: border demarcation, the referendum in Abyei, agreement on oil transit fees, joint exploration agreements, and the citizenship of peoples such as the southerners who have lived for years in Khartoum.

If the corrupt and oppressive al-Bashir regime were to fall, it would leave a power vacuum in Sudan with armed rival fighting for power. Sudan could easily slide into the status of a failed state as Afghanistan did after the fall of the Najibullah regime in 1992.

For a start, the UN needs to implement the Joint Border Verification and Monitoring Mechanism authorised under Resolution 2024 in 2011. The SPLA must also withdraw from Sudanese territory and the Sudan government cease attacking South Sudan.

The South Sudan government is riven by its own internal divisions, to say nothing of those disaffected element who have been sidelined. Without a resumption of oil revenue, it will be unable to pay the SPLA, which could well mutiny. Much greater effort needs to be invested in nation-building now that the euphoria of independence is fading. Without greater inclusion, its legitimacy will be eroded.

The government in Khartoum needs to enter dialogue with disaffected elements in the provinces and redress their grievances with meaningful reforms within an inclusive government.

The IMF and World Bank now need to provide debt relief for Sudan to ease its financial plight. The southern pipeline could not only ease some of the tensions, it could contribute to development in Kenya and Uganda.

All this will require sustained international effort, including “carrots” for both sides to induce them to come to the negotiations. The U.S. needs to lift sanctions and remove Sudan from its list of “states sponsoring terrorism”. America is however in election mode and Obama seems determined to sound bellicose in the face of Republican challengers. China also has to take some hard political decisions to protect its oil interests.