Home | Comment & Analysis    Sunday 27 May 2012

South Sudan’s solution to economic independence


By Mariar Wuoi*

May 27, 2012 — South Sudan’s economy is suffering some shocks due to the sudden decision to shutdown oil production in response to north’s decision to impose unilateral decision to hijack South’s oil as a form of payment for the use of pipelines running across Sudan. The economic ramifications of the shutdown are definitely going to be felt by people in the South. However difficult this decision is, it has been met with widespread support across the South. The reason for widespread is people in the South believe that north’s decision to dictate the terms of economic relationships with the South amounted to a continuation of colonization. Southerners cherish their new-found freedom and are willing to endure hardships to preserve this precious freedom. While still holding on the hope that economic cooperation with the North is still possible, South has embarked on solutions to insulate its economy from current and future shocks emanating from North.

The NCP regime has made a calculated decision that depriving South of its oil export would be a catalyst for regime change in Juba and SPLM’s demise. The NCP’s observation was recently reinforced by the World Bank’s report that predicted dire conditions for the South’s economy. Now, thanks in no small part to the World Bank’s report, all the NCP has to do is wait as South economy implode and cause all kinds of political upheavals. This may not come to fruition because South Sudanese economy is not fully established to suffer in ways predicted in the WB report. Meanwhile in Juba, our government is running around looking for countries and companies to finance an alternative pipeline to Kenya so that South’s economy is not held hostage by Khartoum. So far, this has not been successful at least in the short term.

The reasons given for the reluctance to invest in a new pipeline come down to simple cost-benefit analysis and an international conspiracy to force South to work with North. There are questions regarding the viability of this project because of dwindling oil reserves beneath South and lack of significant discoveries. China is reluctant because its state-owned China National Petroleum Corporation owns major stake in GNPOC consortium that runs and own the existing pipeline running across Sudan. Other countries such as the United States are not eager to encourage building an alternative pipeline because that would lessen the need for cooperation between the two Sudans. In essence, South has found itself being funneled toward settling for a rocky and predatory relationship with its former parent. This is the only door that has been left wide open because it would help restore peace and keep the two countries from resorting to war. The international community is perfectly comfortable with the idea of South continuing to pay half of its oil revenues to Khartoum even though it is going to help Khartoum finance its war on the marginalized people of Blue Nile and South Kordofan and not to mention Darfur. Not only that, Khartoum will use the hard currency to acquire new weapons that would be used against South should there be a need to do so.

Given the barriers being placed on South path’s to economic independence from Khartoum, South needs to recalibrate its expectations and settle for a dual-use infrastructure like railway system between the Kenya’s coast and South’s oilfields. When the United States started on path to industrial revolution and economic prosperity, it did so using railroad that continue to crisscross this great country today. Oil was initially transported using railroad before being piped. It was not efficient but it did the job. Railroad continues to serve an important role today in America’s economy. Farmers in the hinterland are able to transport their produce to urban centers using railroad and then using sophisticated distribution system to reach customers. South would have a relatively easy task finding investors to build railway to Lamu port in Kenya than pipeline that may become unusable in a few decades. I have seen trains with cars or tanks reaching as far back as a kilometer, if not longer, snaking along the banks of the Ohio River. Why can’t this be a way for South to transport its oil and some more? Railway is a multi-purpose infrastructure that can be of use to transport goods cheaply. Trucking goods over dilapidated or nonexistent road is expensive and causes a lot of wear to existing roads. It is also unreliable as a truck can break down or gets bogged down in mud. During rainy reason, vast majority of our roads are impassable. Such an investment would be attractive to Chinese or other companies because there is potential to recoup investment overtime.

While this is not a lasting solution to the need for a more cost-effective way to transport oil to the markets, it gives South the added insurance of not being hassled by Khartoum into settling for a deal that defies economic sense. Using railway to transport oil is also efficient compared to trucks. Right now, the NCP regime has tied economic issues to security issues. Some of the conflicts such as one in Blue Nile and South Kordofan are outside the control of Juba because these regions are fighting for a very legitimate reason. Not even Juba can convince them to accept being exterminated to satisfy the security demands of Khartoum. It is Khartoum that needs to engage the issues causing rebellions and find a solution to its problems. Juba can facilitate finding that solution but it does not hold the keys to what Khartoum must be willing to offer. In this sense, tying what is clearly a political issue to economic cooperation is a sure way to say that solution is not within reach.

South Sudanese are a resilient people and are willing to endure hardships to preserve their economic and political independence. Our government must examine all possible solutions that would guarantee our economic independence so that we meet North as equals. We need to look into using railway system to transport our oil products to the market. Even if it would not meet our need to maintain current production levels, an alternative like railway would give us a chance to negotiate from a position of equals if not strength. It may take a while to build a railway but we should not wait for a crisis to chance upon us before we start thinking strategically.

*The author is a South Sudanese freelance writer and commentator. He can be reached at jmwuoi@gmail.com

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