Home | Comment & Analysis    Tuesday 7 August 2018

Back to the future: Khartoum’s ’peace’ in South Sudan

By Magdi El Gizouli

“Oil will start pumping dear[President] Salva [Kiir] so you can give your opponents cars and offices” President Bashir told his guests, signatories of South Sudan’s newest peace deal and attending dignitaries and the hundreds of South Sudanese who assembled in Khartoum’s Chinese-built Friendship Hall on 5 August to witness the ceremonial end of Khartoum’s bid to bring ‘peace’ to South Sudan. President Bashir uttered in clear terms the kernel of truth at the heart of the wizardry of power-sharing formulas that constitute the letter of the deal. The weaker among the belligerents at the table complained repeatedly of the tough arm of the Sudanese security services, the effective mediators of the agreement.

What matters, President Bashir declared that South Sudanese oil will start pumping again from South Sudan’s Unity oil fields to Sudan on 1 September. Some in Khartoum claimed that the Sudan TV crew that covered the celebrations all suffered food poisoning after helping themselves to the free for all falafel sandwiches. Salva and Riek were probably spared the ‘vegan’ option.

The final power-sharing arrangement was born out of the Entebbe proposal, a sloppy numerical solution to the complex crisis in South Sudan devised by presidents Bashir and Museveni of Sudan and Uganda with President Kiir of South Sudan and his archival Riek Machar attending. The muscle diplomacy was so potent the notetakers who drafted the initial 5 point proposal on power-sharing misspelt President Salva Kiir’s name. The presidency according to the 7 July Entebbe statement was to be composed of Salava (sic) Kiir as President, Dr. Riek Machar, Taban Deng Gai, James Wanni Igga and an unnamed woman as vice presidents.

Before developments got that far Khartoum was celebrating; the arguments between the South Sudanese warlords around the arithmetic of the arrangement were but a side-show. The jubilant stick-dancing on 6 July in the command headquarters of the Sudan Armed Forces (SAF) joining Sudan’s spy chief Salah Gosh in a flowing jellabiya and South Sudanese politicians in their elegant suits was the in-house version of the celebration on 5 August. The performers on commission of the NISS bellowed the lyrics of an old Sudanese tune “Juba what to do you have against me?”.
Well, Gosh had good cause to rejoice. The South Sudanese belligerents had just agreed to grant Khartoum and Kampala immediate monitoring capability over their military affairs in their capacity as leading members of a restructured and reconstituted Ceasefire Transitional Security Arrangements Monitoring and Verification Mechanism (CTSAMVM) in the last article of a four pages transitional security arrangements agreement following on the ceasefire declaration signed by President Kiir, Riek Machar and leaders of other South Sudanese factions in Khartoum on 27 June. No one expects the agreement to hold as such. What matters is that it formally endorses the authority of Khartoum and Kampala over the power calculus in Juba and allows that authority to operate openly. Khartoum cannot be accused in meddling in South Sudanese affairs anymore, it is an invited actor on a busy field that it cannot afford to vacate.

Adequately timed, Khartoum delivered on 4 August a second batch of proposals to Washington on the normalisation of ties between the two countries in line with the ‘Five-Track Engagement Plan’ in which Khartoum agreed to a cessation of hostilities against armed groups, unfettered humanitarian access to conflict-affected areas, support of efforts for peace in South Sudan and further cooperation with the US on counter-terrorism in the region. Washington has so far lifted its 20 years old economic sanctions regime on Khartoum but did not remove Sudan from its list of state sponsors of terrorism thus barring Sudan further from access to debt relief and international financial assistance.

Attendant at the Friendship Hall celebration was President Museveni of Uganda. He apparently flew in for the occasion directly from his farm and had no time to put on a proper statesmanly suit. He was so concerned about his decorum that he apologised to the guests and the crowd and blamed President Bashir for the sartorial mishap asking for a cow in compensation in keeping with alleged Ugandan custom. Uganda’s military intervention in South Sudan was welcomed in Juba and hailed by some as an African version of ‘humanitarian intervention’. Khartoum was not amused. Ugandan troops entered South Sudan just five days into the outbreak of conflict in Juba on 15 December 2013. At the time, Kampala argued that it had amongst other reasons been invited by the government in Juba to maintain security and order. Indeed, President Kiir’s government signed a Status of Forces Agreement (SoFA) with the Ugandan government on 10 January 2014 allowing the Ugandan army to operate in South Sudan.

Kasaja Philip Apuuli, a Makerere political scientist, analysed at length the multiple declared motivations of Uganda’s military involvement in South Sudan to conclude that it’s the economy stupid. South Sudan, he explained, has since 2007 been the single largest recipient of Ugandan exports. Apuuli quoted an estimate from the Bank of Uganda from January 2014 of 220 million US dollars worth of goods per month amounting in 2012 to an income of 1.3 billion US dollars, or a quarter of Uganda’s annual budget calculating by estimates from 2013-2014. Khartoum, perceived for all practical purposes as the patron at large of South Sudanese rebels, could at no juncture ground its involvement in South Sudan on any semblance of justification apart from Juba’s support for Sudanese rebel groups. Now, it co-leads the CTSAMVM if you recall what that is and has ample opportunity to ‘manage’ South Sudan’s military-bureaucratic elite comfortably hosted in the SAF headquarters.

If South Sudan is a treasure chest for Uganda, South Sudanese oil is the lifeblood of Sudan’s economy. The loss of oil revenues following the independence of South Sudan in 2011 left Khartoum’s finances in shambles, a situation made ever more acute by the failure of President Bashir’s successive cabinets since to work out any alternatives. At the height of production back in 2008, crude petroleum exports at production levels of around 500 thousand barrels per day (bpd) amounted to 2.53 billion US dollars or 84% of Sudan’s total exports. Today, Sudan produces around 100 thousand bpd, an amount that is not even sufficient to grease the machinery of kickbacks and racketeering that facilitates oil operations in the first place, hence the inability of the government of Sudan to maintain its only functional refinery in Khartoum. The Khartoum refinery has been on and off for the past year or so for lack of repairs and the Port Sudan refinery was finally decommissioned in December 2017. As a consequence Sudan has been in the throws of a punishing foreign currency deficit and a consequent fuel crisis over the past few years.

Khartoum’s response to its economic malaise has been a combination of bluff and security measures. Already in 2012, Sudan declared that it had earned 2.2 billion US dollars that year from gold revenues. A similar figure was quoted repeatedly under the title of a Qatari loan and again a Saudi loan. There has been indeed a gold rush of sorts in Sudan’s northern regions pioneered by artisanal miners working under treacherous conditions and unwilling to surrender their precious produce to the Bank of Sudan, which initially claimed monopoly of purchase and then relaxed its ineffectual policy allowing private producers in March 2017 to export 60% of their production and sell the remaining 40% to the Bank of Sudan. The Bank reversed course again in November 2017 declaring a monopoly on the purchase and export of gold with the exemption of licensed companies which were permitted to export 70% of their production and sell the remaining 30% to the Bank of Sudan. This exemption was then annulled in February 2018 with a presidential declaration of an outright monopoly of the purchase, sale and export of gold.

According to the available figures, gold currently amounts to 33% of Sudan’s exports, the government maintains however that 90% of gold production is smuggled out of the country, a figure that is employed as an excuse for the economic meltdown in the country and as a license to securitise the gold mining sector. The Ministry of Mining reported that around 2 million people are directly or indirectly involved in the artisanal mining sector which according to government figures contributes 90% of gold production while a list of 370 medium- and large-scale companies, 102 of which are foreign, hold concessions in 120 locations but contribute only 10% of gold production. To buy the gold it wants so badly to turn into foreign currency the Bank of Sudan is at great pains to offer competitive prices to producers in order to discourage smuggling and has resorted to printing cash, thereby driving inflation upwards and the value of the Sudanese currency steeply downwards.

The government’s attempts to increase its share of gold capture has recently translated into a crackdown on individuals and entities accused of involvement in credit creation for financing gold purchases. In March this year the National Intelligence and Security Service (NISS) arrested the director general of Faisal Islamic Bank and the chairman of the board of directors of the Islamic Insurance Company on accusations of corruption. The list of detainees included over the past months the directors of three prominent oil companies, several businessmen and and the deputy chairman of the board of directors of the Bank of Khartoum. To formalise the new authority of the NISS, President Bashir and Salah Gosh inaugurated on 30 July a new directorate of the security service tasked with the combat of corruption. In its quest for rent, an exasperated President Bashir is axing at his own political base.

It is under these circumstances that Khartoum seeks some working arrangement between the South Sudanese belligerents to enable the resumption of oil production in South Sudan, and hence shore up its finances through the terms of the 2012 post-secession arrangements agreement between the two countries. Under the terms of the deal, South Sudan still owes Sudan 1.3 billion US dollars worth of oil, an equivalent of 8 years worth of oil production at current prices. South Sudan had agreed to pay Khartoum 3 billion US dollars in compensation for the loss of oil as well as 26 US dollars in fees for each barrel of oil exported through Sudan. In the fiscal year 2015/2016, the International Monetary Fund estimated that Juba accumulated 291 million US dollars in payment arrears related to the 2012 agreement.

The essential component of the deal from Khartoum’s perspective, it follows, is the clause included already in the 27 June Khartoum Declaration surrendering the security of the oil fields to the Sudanese army in coordination with Juba and providing for immediate resumption in collaboration with the Sudanese government of the rehabilitation of damaged oil installations in the Unity region, blocks 1, 2, 4 and 5. Sudan and South Sudan agreed a day earlier to double oil production form South Sudan’s oil fields by the end of the year. Earlier in the month, on 7 June, Juba had declared an agreement with a visiting delegation from Khartoum to repair South Sudan’s damaged oil fields. On 9 July, a Sudanese delegation was in Juba to discuss technicalities of rehabilitation and re-operation. Technical teams from Sudan’s Ministry of oil inspected oil fields in South Sudan and scheduled further visits once security was ensured.

Judging by precedence and intent, Sudan’s predatory stance is no novelty. Khartoum and Juba had signed already in September 2017 an agreement to increase oil production in South Sudan with Sudanese assistance. Luke Patey, an expert on the oil industry in Sudan and South Sudan, said the trend was “a reversal of the economic independence South Sudan won after separating from Sudan”. Indeed, on 19 July South Sudan’s Minister of Oil said Sudan and South Sudan have effectively deployed a joint border force to protect his country’s oil fields. Within two months, he said, we will produce oil from the fields of Unity and export it through Port Sudan.
Khartoum’s ‘peace’ in South Sudan is reminiscent of its original war harking back to the knot that is Bentiu’s oil fields. The Chevron camp close to Bentiu was the site of the 1984 rebel attack on oil workers. At the time, the Sudan government promised to protect the oil fields and began arming militias, initially from the ethnic Misseriya of neighbouring South Kordofan to counter the southern Sudanese rebels and subsequently from rival ethnic Nuer factions. This mission developed into a long-term campaign to depopulate the Dinka and Nuer communities around Bentiu and involved in the commission of Khartoum and the oil firms in its partnership the notorious militia formations that coalesced under the banner of the undead South Sudan Defence Forces (SSDF). President Bashir was probably involved directly in these undertakings. In the late 1980s, he was posted in al-Muglad of South Kordofan at the time when the government was recruiting militia forces to fight the Sudan People’s Liberation Army (SPLA) and he was in Unity’s Mayom doing the same until a week before the putsch that brought him to power in Khartoum. The liberation leaders of yesteryear dine today around his table, their flag shredded into napkins, expectant of cars and offices.

The author is a fellow of the Rift Valley Institute. He publishes regular opinion articles and analyses at his blog Still Sudan. He can be reached at m.elgizouli@gmail.com