September 17, 2012

Delegations representing Sudan and South Sudan came together on 4 September in Addis Ababa for a new round of talks over the many unresolved issues between the two countries. The tentative agreement of 3 August on the fees for transporting South Sudan's oil through Sudan has been described as a major step forward in the efforts to normalise relations between the two neighbouring states. The agreement, yet to be signed, is currently contingent on solutions to the other outstanding issues. Both countries are under severe economic duress following the shutdown of oil production by South Sudan earlier this year and pressure is increasing on the parties to finalize the oil deal, but sufficient political will to reach compromises on these difficult questions is still lacking.

This recent progress in oil negotiations adds momentum to a shift away from the current strategy of a comprehensive package deal in preference of a piecemeal approach with standalone individual agreements. While this potentially could speed up the implementation of the oil deal, and hence ensure a rapid solution to the parties’ economic difficulties in the short-term, the decoupling of the oil issue from the other questions might leave fundamental and intractable issues unresolved. Meanwhile, however, the conflict in the Nuba Mountains and Blue Nile state should be decoupled from the bilateral negotiations between Sudan and South Sudan and instead be pursued in a parallel track, where Juba can play a key facilitator role.

Background

In May 2012 the African Union (AU) and later the United Nations (UN) Security Council gave Sudan and South Sudan a three-month deadline to reach a comprehensive agreement on the unresolved issues adversely affecting their relations. The deadline expired on 2 August without any agreement on the table, but Thabo Mbeki, the AU's chief negotiator, has set a new deadline of 22 September for the parties to reach agreements on all outstanding issues.

The contested border between the two countries is the most difficult issue to resolve: this is a zero-sum game where national pride, profitable natural resources and support from strategic border constituencies are at stake. But, other issues also remain intractable: oil sector management, security arrangements, the future of the Abyei area, natural resources management, and the legal status of several hundred thousand people who have become foreigners in their own homes after South Sudan's independence.

The urgency of an oil agreement

Since South Sudan became independent on 9 July 2011, negotiations on the oil sector have been considered the most urgent by the mediators and parties. South Sudan, being landlocked, can only export its oil to the international market via pipelines traversing Sudanese territory to reach Port Sudan for further transportation. The sense of urgency in reaching an oil deal increased following Juba’s decision to shut down all oil production in January, in response to stalled negotiations and Khartoum’s confiscation of its crude oil.

Being heavily dependent on revenues generated by oil export, South Sudan has become extremely vulnerable as a result of the oil shutdown. The loss of 98 percent of its state revenues threatens South Sudan’s statehood, since its stability is dependent on a steady flow of revenue through the civilian and military structures of the government. But Sudan is also significantly affected by the shutdown. Like the Government of South Sudan, the leadership in Khartoum need oil revenues to retain political and economic stability and remain in power.

The oil shutdown has already had severe consequences. Inflation is skyrocketing in both countries and availability of essential commodities such as fuel, sugar and grain decreases day by day. This is causing popular unrest within both countries. In the absence of considerable monetary gifts or loans from abroad to compensate for state revenue shortfalls, both parties have a mutual interest in the resumption of oil production.

So far, the oil negotiations have made the most rapid progress, although a final deal is yet to be reached. In the course of a few days the parties managed to agree on the oil transit fees, despite their earlier highly disparate positions. In line with this tentative agreement, which has a temporary timeline of three-and-a-half years, Juba will pay $11 per barrel for the oil produced by Unity State and $9.10 per barrel for that of Upper Nile. South Sudan has also agreed to provide $3.028 billion as transitional financial assistance to Sudan. The parties, however, did not reach this far as a result of political will alone: Mbeki and the leader of the South Sudanese delegation, Pagan Amum, both testified to pressure from – among others – the US, the UK and Norway.

While the August 3 oil deal is yet to be finalized, Juba recently declared it is preparing to resume oil production. According to the South Sudanese Minister of Petroleum and Mining, the recommencement of oil production in Upper Nile state (Dar Blend) will require between four and six months, while the Unity state oil fields (Nile Blend) could take up to one year. The damage to facilities caused by the rapid shutdown and aerial bombings can cause further delays. Moreover, if Khartoum continues to insist on linking the signing of an oil deal with the ‘security issues’ in South Kordofan and Blue Nile state, the resumption of oil production may be further postponed.

Security issues

Despite mutually binding security agreements, both sides probably support armed groups operating in their neighbour’s territory. The main bone of contention between the parties is the rebel groups operating north of the border in the Nuba Mountains (South Kordofan state) and Blue Nile state (the Sudan People’s Liberation Movement/Army – North). Khartoum wants to include this issue in the on-going bilateral negotiations with South Sudan.

However, although South Sudan undoubtedly has strong political ties to the rebels, Khartoum’s demand that Juba disarms and demobilises them is unrealistic. Even if a security agreement is reached in these two states, the problem is likely to persist unless the underlying grievances of the people of Nuba Mountains and Southern Blue Nile State are addressed. Juba could nonetheless play a key role in a future peace process between Khartoum and the Sudanese rebels, and has recently offered to facilitate such talks. Khartoum has so far shown little interest in finding a political solution to the conflict, but increased military pressure from the rebels may eventually force the government to change its current strategy.

The peace processes in South Kordofan and Blue Nile States should be decoupled from the Sudan-South Sudan negotiations. However, such a decoupling does not entail postponing the search for a compromise, but rather pursuing a parallel track acknowledging and addressing the underlying centre-periphery causes of the conflict.

Negotiations over security issues also revolve around the establishment of a de-militarised zone straddling the border. This zone is intended to create a buffer between the two parties and preclude future hostilities. The Sudanese government has, however, rejected the map proposed by the AU mediation team. Although the AU has stressed its temporary nature and decoupled it from any permanent border demarcation, Khartoum’s main objection has been the map’s inclusion of the disputed 14-mile area along the River Kiir/Bahr el Arab on the southern side of the border. Deadlock ensued. In its recent statement, the UN Security Council urges Khartoum to accept the administrative security map ‘without any further delay’ in order to facilitate the establishment of a demilitarized zone on the common border.

The UN, however, only has a supporting role in monitoring and regulating the demilitarized zone, while the parties (Sudan and South Sudan) are responsible for its implementation. These arrangements are not in themselves expected to affect armed groups currently depending on cross-border supplies; cessation of any support from the parties to such entities is primarily dependent on political agreements by the parties. The zone is thus expected to have a limited impact on security in the border area and is chiefly a confidence building measure between the parties.

Towards an agreement to continue negotiations?

In 2005 it was possible to reach a comprehensive peace agreement between the South Sudanese rebels and the ruling party in Khartoum to end the civil war. So far the ultimate goal of the current negotiations between South Sudan and Sudan has been to reach a somewhat similar comprehensive agreement, which includes the terms for South Sudan’s secession and regulation of future relations and interaction between the two countries. It might be feasible for the parties to reach compromises within a framework where trade-offs and concessions encompass a range of outstanding issues, but the process of negotiating such an agreement has inevitably slowed down and complicated a resolution of the more urgent issues, first and foremost the oil transportation issue.

Also, the parties have failed to muster the necessary political will to find such a solution. Although neither Sudan nor South Sudan can be defined as liberal democracies, the ruling elites are still vulnerable to domestic pressure. The secession of the South and ensuing economic difficulties have resulted in discontent and wrangling within the ruling party in Khartoum. Similarly, South Sudan’s compromise with Sudan on the oil fees has been criticised domestically, and recent reports indicate internal discord within the ruling party, the SPLM. These developments make it difficult for the two presidents, al-Bashir and Salva Kiir, to make extensive “concessions” in the on-going negotiations.

Considering delays and the intractability of the remaining issues it is unlikely that the upcoming Presidential Summit between Kiir and al-Bashir on 21 September will result in a comprehensive agreement. Also the death of the Prime Minister of Ethiopia Meles Zenawi, who had a key role in the negotiations, may reduce the prospects of reaching a comprehensive deal within the set timeline. Securing an ‘agreement to agree’ would be problematic given the track record of the two parties on implementing past agreements.

In the midst of these challenges, the mediators and other external players follow the two parties’ economic brinkmanship with increasing apprehension and there seems to be a preference among some of these actors for a separate oil agreement. However, while a piecemeal approach potentially could speed up the implementation of the oil deal and reduce the parties’ economic difficulties in the short-term, the separation of the oil issue from the other questions might leave fundamental and intractable issues infinitely unresolved. Indeed, the mutual need for oil revenues is probably the most critical incentive in the on-going negotiations.

Judging from the snail pace and repeated breakdowns of the negotiations prior to South Sudan’s shut-down of oil production in January, the parties may then prefer to leave questions such as the borders, Abyei, distribution of national debt and use of Nile water unresolved. Further to being detrimental to long term stability and neighbourly relations, the two countries’ economies – and people – will have to carry the burdens of the unresolved issues. 

There already exists a set of tentative agreements on most of the outstanding issues and, if linked to the more substantial oil issue, the parties could close a more comprehensive deal within a reasonable time. The question is whether the parties have the necessary political will even to make these light concessions within 22 September. Finally, even if an agreement is reached, this will just be one stage in a long-lasting process of normalisation, which is not made easier by the parties’ chequered history of implementing past agreements.